**EXHIBIT4.4**

 

 

**UTSTARCOM,INC.**

 

**7/8%CONVERTIBLE SUBORDINATED NOTES DUE 2008**

 

 

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**INDENTURE**

**DATEDAS OF MARCH 12, 2003**

 

 

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**U.S.BANK NATIONAL ASSOCIATION,**

**ASTRUSTEE**

 

 

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**TABLEOF CONTENTS**

 
| ARTICLE 1 DEFINITIONS AND INCORPORATION BY  REFERENCE |
|-------------------------------------------------------|
|                                                  |
|                                                  | SECTION 1.1. | DEFINITIONS |
|                                                  | SECTION 1.2. | OTHER DEFINITIONS |
|                                                  | SECTION 1.3. | TRUST INDENTURE ACT PROVISIONS |
|                                                  | SECTION 1.4. | RULES OF CONSTRUCTION |
|                                                  |
| ARTICLE 2 THE SECURITIES                              |
|                                                  |
|                                                  | SECTION 2.1. | FORM AND DATING |
|                                                  | SECTION 2.2. | EXECUTION AND AUTHENTICATION |
|                                                  | SECTION 2.3. | REGISTRAR, PAYING AGENT AND CONVERSION  AGENT |
|                                                  | SECTION 2.4. | PAYING AGENT TO HOLD MONEY IN TRUST |
|                                                  | SECTION 2.5. | SECURITYHOLDER LISTS |
|                                                  | SECTION 2.6. | TRANSFER AND EXCHANGE |
|                                                  | SECTION 2.7. | REPLACEMENT SECURITIES |
|                                                  | SECTION 2.8. | OUTSTANDING SECURITIES |
|                                                  | SECTION 2.9. | TREASURY SECURITIES |
|                                                  | SECTION 2.10. | TEMPORARY SECURITIES |
|                                                  | SECTION 2.11. | CANCELLATION |
|                                                  | SECTION 2.12. | LEGEND; ADDITIONAL TRANSFER AND EXCHANGE  REQUIREMENTS |
|                                                  | SECTION 2.13. | CUSIP NUMBERS |
|                                                  |
| ARTICLE 3 REDEMPTION AND PURCHASES                    |
|                                                  |
|                                                  | SECTION 3.1. | NO REDEMPTION BY THE COMPANY |
|                                                  | SECTION 3.2. | PURCHASE OF SECURITIES AT OPTION OF THE  HOLDER UPON CHANGE IN CONTROL |
|                                                  | SECTION 3.3. | EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE |
|                                                  | SECTION 3.4. | DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE |
|                                                  | SECTION 3.5. | SECURITIES PURCHASED IN PART |
|                                                  | SECTION 3.6. | COMPLIANCE WITH SECURITIES LAWS UPON  PURCHASE OF SECURITIES |
|                                                  | SECTION 3.7. | REPAYMENT TO THE COMPANY |
|                                                  |
| ARTICLE 4 CONVERSION                                  |
|                                                  |
|                                                  | SECTION 4.1. | CONVERSION PRIVILEGE |
|                                                  | SECTION 4.2. | CONVERSION PROCEDURE |
|                                                  | SECTION 4.3. | FRACTIONAL SHARES |
|                                                  | SECTION 4.4. | TAXES ON CONVERSION |
|                                                  | SECTION 4.5. | COMPANY TO PROVIDE STOCK |
|                                                  | SECTION 4.6. | ADJUSTMENT OF CONVERSION PRICE |
|                                                  | SECTION 4.7. | NO ADJUSTMENT |
|                                                  | SECTION 4.8. | ADJUSTMENT FOR TAX PURPOSES |
|                                                  | SECTION 4.9. | NOTICE OF ADJUSTMENT |
|                                                  | SECTION 4.10. | NOTICE OF CERTAIN TRANSACTIONS |
|                                                  | SECTION 4.11. | EFFECT OF RECLASSIFICATION, CONSOLIDATION,  MERGER OR SALE ON CONVERSION PRIVILEGE |
|                                                  | SECTION 4.12. | TRUSTEE’S DISCLAIMER |

 

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|                                                            | SECTION 4.13. | VOLUNTARY REDUCTION                                  |
|-----------------------------------------------------------------|--------------------|------------------------------------------------------|
|                                                            |
| ARTICLE 5 SUBORDINATION                                         |
|                                                            |
|                                                            | SECTION 5.1.  | AGREEMENT OF SUBORDINATION                           |
|                                                            | SECTION 5.2.  | PAYMENTS TO HOLDERS                                  |
|                                                            | SECTION 5.3.  | SUBROGATION OF SECURITIES                            |
|                                                            | SECTION 5.4.  | AUTHORIZATION TO EFFECT SUBORDINATION                |
|                                                            | SECTION 5.5.  | NOTICE TO TRUSTEE                                    |
|                                                            | SECTION 5.6.  | TRUSTEE’S RELATION TO SENIOR INDEBTEDNESS       |
|                                                            | SECTION 5.7.  | NO IMPAIRMENT OF SUBORDINATION                       |
|                                                            | SECTION 5.8.  | CERTAIN CONVERSIONS DEEMED PAYMENT                   |
|                                                            | SECTION 5.9.  | ARTICLE APPLICABLE TO PAYING AGENTS                  |
|                                                            | SECTION 5.10. | SENIOR INDEBTEDNESS ENTITLED TO RELY                 |
|                                                            |
| ARTICLE 6 COVENANTS                                             |
|                                                            |
|                                                            | SECTION 6.1.  | PAYMENT OF SECURITIES                                |
|                                                            | SECTION 6.2.  | SEC REPORTS                                          |
|                                                            | SECTION 6.3.  | COMPLIANCE CERTIFICATES                              |
|                                                            | SECTION 6.4.  | FURTHER INSTRUMENTS AND ACTS                         |
|                                                            | SECTION 6.5.  | MAINTENANCE OF CORPORATE EXISTENCE                   |
|                                                            | SECTION 6.6.  | RULE 144A INFORMATION REQUIREMENT                    |
|                                                            | SECTION 6.7.  | STAY, EXTENSION AND USURY LAWS                       |
|                                                            | SECTION 6.8.  | PAYMENT OF ADDITIONAL INTEREST                       |
|                                                            |
| ARTICLE 7 CONSOLIDATION, MERGER,  CONVEYANCE, TRANSFER OR LEASE |
|                                                            |
|                                                            | SECTION 7.1.  | COMPANY MAY CONSOLIDATE, ETC, ONLY ON  CERTAIN TERMS |
|                                                            | SECTION 7.2.  | SUCCESSOR SUBSTITUTED                                |
|                                                            |
| ARTICLE 8 DEFAULT AND REMEDIES                                  |
|                                                            |
|                                                            | SECTION 8.1.  | EVENTS OF DEFAULT                                    |
|                                                            | SECTION 8.2.  | ACCELERATION                                         |
|                                                            | SECTION 8.3.  | OTHER REMEDIES                                       |
|                                                            | SECTION 8.4.  | WAIVER OF DEFAULTS AND EVENTS OF DEFAULT             |
|                                                            | SECTION 8.5.  | CONTROL BY MAJORITY                                  |
|                                                            | SECTION 8.6.  | LIMITATIONS ON SUITS                                 |
|                                                            | SECTION 8.7.  | RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO  CONVERT |
|                                                            | SECTION 8.8.  | COLLECTION SUIT BY TRUSTEE                           |
|                                                            | SECTION 8.9.  | TRUSTEE MAY FILE PROOFS OF CLAIM                     |
|                                                            | SECTION 8.10. | PRIORITIES                                           |
|                                                            | SECTION 8.11. | UNDERTAKING FOR COSTS                                |
|                                                            |
| ARTICLE  9 TRUSTEE                                              |
|                                                            |
|                                                            | SECTION 9.1.  | DUTIES OF TRUSTEE                                    |
|                                                            | SECTION 9.2.  | RIGHTS OF TRUSTEE                                    |
|                                                            | SECTION 9.3.  | INDIVIDUAL RIGHTS OF TRUSTEE                         |

 

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|                                                | SECTION 9.4.   | TRUSTEE’S DISCLAIMER                                       |
|-----------------------------------------------------|---------------------|-----------------------------------------------------------------|
|                                                | SECTION 9.5.   | NOTICE OF DEFAULT OR EVENTS OF DEFAULT                          |
|                                                | SECTION 9.6.   | REPORTS BY TRUSTEE TO HOLDERS                                   |
|                                                | SECTION 9.7.   | COMPENSATION AND INDEMNITY                                      |
|                                                | SECTION 9.8.   | REPLACEMENT OF TRUSTEE                                          |
|                                                | SECTION 9.9.   | SUCCESSOR TRUSTEE BY MERGER, ETC                                |
|                                                | SECTION 9.10.  | ELIGIBILITY; DISQUALIFICATION                                   |
|                                                | SECTION 9.11.  | PREFERENTIAL COLLECTION OF CLAIMS AGAINST  COMPANY              |
|                                                |
| ARTICLE 10 SATISFACTION AND DISCHARGE OF  INDENTURE |
|                                                |
|                                                | SECTION 10.1.  | SATISFACTION AND DISCHARGE OF INDENTURE                         |
|                                                | SECTION 10.2.  | APPLICATION OF TRUST MONEY                                      |
|                                                | SECTION 10.3.  | REPAYMENT TO COMPANY                                            |
|                                                | SECTION 10.4.  | REINSTATEMENT                                                   |
|                                                |
| ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND  WAIVERS     |
|                                                |
|                                                | SECTION 11.1.  | WITHOUT CONSENT OF HOLDERS                                      |
|                                                | SECTION 11.2.  | WITH CONSENT OF HOLDERS                                         |
|                                                | SECTION 11.3.  | COMPLIANCE WITH TRUST INDENTURE ACT                             |
|                                                | SECTION 11.4.  | REVOCATION AND EFFECT OF CONSENTS                               |
|                                                | SECTION 11.5.  | NOTATION ON OR EXCHANGE OF SECURITIES                           |
|                                                | SECTION 11.6.  | TRUSTEE TO SIGN AMENDMENTS, ETC                                 |
|                                                | SECTION 11.7.  | EFFECT OF SUPPLEMENTAL INDENTURES                               |
|                                                |
| ARTICLE 12 MISCELLANEOUS                            |
|                                                |
|                                                | SECTION 12.1.  | TRUST INDENTURE ACT CONTROLS                                    |
|                                                | SECTION 12.2.  | NOTICES                                                         |
|                                                | SECTION 12.3.  | COMMUNICATIONS BY HOLDERS WITH OTHER  HOLDERS                   |
|                                                | SECTION 12.4.  | CERTIFICATE AND OPINION AS TO CONDITIONS  PRECEDENT             |
|                                                | SECTION 12.5.  | RECORD DATE FOR VOTE OR CONSENT OF  SECURITYHOLDERS             |
|                                                | SECTION 12.6.  | RULES BY TRUSTEE, PAYING AGENT, REGISTRAR  AND CONVERSION AGENT |
|                                                | SECTION 12.7.  | LEGAL HOLIDAYS                                                  |
|                                                | SECTION 12.8.  | GOVERNING LAW                                                   |
|                                                | SECTION 12.9.  | NO ADVERSE INTERPRETATION OF OTHER  AGREEMENTS                  |
|                                                | SECTION 12.10. | NO RECOURSE AGAINST OTHERS                                      |
|                                                | SECTION 12.11. | SUCCESSORS                                                      |
|                                                | SECTION 12.12. | MULTIPLE COUNTERPARTS                                           |
|                                                | SECTION 12.13. | SEPARABILITY                                                    |
|                                                | SECTION 12.14. | TABLE OF CONTENTS, HEADINGS, ETC                                |

 

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CROSS-REFERENCETABLE*

 
| **TIA  SECTION** |   |                  |   | **INDENTURE  SECTION** |
|------------------|--------|-----------------------|--------|------------------------|
| Section          |   | 310(a)(1)             |   | 9.10                   |
|             |   | (a)(2)                |   | 9.10                   |
|             |   | (a)(3)                |   | N.A.**                 |
|             |   | (a)(4)                |   | N.A.                   |
|             |   | (a)(5)                |   | 9.10                   |
|             |   | (b)                   |   | 9.8; 9.10              |
|             |   | (c)                   |   | N.A.                   |
| Section          |   | 311(a)                |   | 9.11                   |
|             |   | (b)                   |   | 9.11                   |
|             |   | (c)                   |   | N.A.                   |
| Section          |   | 312(a)                |   | 2.5                    |
|             |   | (b)                   |   | 12.3                   |
|             |   | (c)                   |   | 12.3                   |
| Section          |   | 313(a)                |   | 9.6                    |
|             |   | (b)(1)                |   | N.A.                   |
|             |   | (b)(2)                |   | 9.6                    |
|             |   | (c)                   |   | 9.6; 12.2              |
|             |   | (d)                   |   | 9.6                    |
| Section          |   | 314(a)                |   | 6.2; 6.3; 12.2         |
|             |   | (b)                   |   | N.A.                   |
|             |   | (c)(1)                |   | 12.4(a)                |
|             |   | (c)(2)                |   | 12.4(a)                |
|             |   | (c)(3)                |   | N.A.                   |
|             |   | (d)                   |   | N.A.                   |
|             |   | (e)                   |   | 12.4(b)                |
|             |   | (f)                   |   | N.A.                   |
| Section          |   | 315(a)                |   | 9.1(b)                 |
|             |   | (b)                   |   | 9.5; 12.2              |
|             |   | (c)                   |   | 9.1(a)                 |
|             |   | (d)                   |   | 9.1(c)                 |
|             |   | (e)                   |   | 8.11                   |
| Section          |   | 316(a)(last sentence) |   | 2.9                    |
|             |   | (a)(1)(A)             |   | 8.5                    |
|             |   | (a)(1)(B)             |   | 8.4                    |
|             |   | (a)(2)                |   | N.A.                   |
|             |   | (b)                   |   | 8.7                    |
|             |   | (c)                   |   | 12.5                   |
| Section          |   | 317(a)(1)             |   | 8.8                    |
|             |   | (a)(2)                |   | 8.9                    |
|             |   | (b)                   |   | 2.4                    |
| Section          |   | 318(a)                |   | 12.1                   |

 

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*  This Cross-Reference Table shall not, for anypurpose, be deemed a part of this Indenture.

**  N.A. means Not Applicable.

 

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THIS INDENTURE dated asof March 12, 2003 is between UTStarcom, Inc., a corporation duly organizedunder the laws of the State of Delaware (the “Company”), and U.S. Bank NationalAssociation, a national banking association organized and existing under thelaws of the United States, as Trustee (the “Trustee”).

 

In consideration of thepremises and the purchase of the Securities by the Holders thereof, bothparties agree as follows for the benefit of the other and for the equal andratable benefit of the registered Holders of the Company’s 7/8% ConvertibleSubordinated Notes due 2008.

 

# **ARTICLE1DEFINITIONS AND INCORPORATION BY REFERENCE**

 

**SECTION 1.1.   DEFINITIONS.**

 

“Additional Interest” hasthe meaning specified in Section 5 of the Registration RightsAgreement.  All references herein tointerest accrued or payable as of any date shall include any AdditionalInterest accrued or payable as of such date as provided in the RegistrationRights Agreement.

 

“Affiliate” means, withrespect to any specified person, any other person directly or indirectlycontrolling or controlled by or under direct or indirect common control withsuch specified person.  For the purposesof this definition, “control” when used with respect to any person means thepower to direct the management and policies of such person, directly orindirectly, whether through the ownership of voting securities, by contract orotherwise; and the terms “controlling” and “controlled” have meaningscorrelative to the foregoing.

 

“Agent” means anyRegistrar, Paying Agent or Conversion Agent.

 

“Applicable Procedures”means, with respect to any transfer or exchange of beneficial ownershipinterests in a Global Security, the rules and procedures of the Depositary, ineach case to the extent applicable to such transfer or exchange.

 

“Applicable Stock” means(i) the Common Stock or (ii) in the event of a merger, consolidation orother similar transaction involving the Company that is otherwise permittedhereunder in which the Company is not the surviving corporation, the commonstock, common equity interests, ordinary shares or depositary shares or othercertificates representing common equity interests of such surviving corporationor its direct or indirect parent corporation.

 

“Board of Directors”means either the board of directors of the Company or any committee of theBoard of Directors authorized to act for it with respect to this Indenture.

 

“Business Day” means eachday that is not a Legal Holiday.

 

“Capital Stock” or“capital stock” of any Person means any and all shares, interests, rights topurchase, warrants, options, participations or other equivalents of orinterests in (however designated) equity of such Person, but excluding any debtsecurities convertible into such equity.

 

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“Cash” or “cash” meanssuch coin or currency of the United States as at any time of payment is legaltender for the payment of public and private debts.

 

“Certificated Security”means a Security that is in substantially the form attached hereto as Exhibit Aand that does not include the information or the schedule called for byfootnotes 1, 3 and 4 thereof.

 

“Common Stock” means thecommon stock of the Company, $0.00125 par value, as it exists on the date ofthis Indenture and any shares of any class or classes of capital stock of theCompany resulting from any reclassification or reclassifications thereof andwhich have no preference in respect of dividends or of amounts payable in theevent of any voluntary or involuntary liquidation, dissolution or winding-up ofthe Company and which are not subject to redemption by the Company; provided,however, that if at any time there shall be more than one such resultingclass, the shares of each such class then so issuable on conversion ofSecurities shall be substantially in the proportion which the total number ofshares of such class resulting from all such reclassifications bears to thetotal number of shares of all such classes resulting from all suchreclassifications.

 

“Company” means the partynamed as such in the first paragraph of this Indenture until a successorreplaces it pursuant to the applicable provisions of this Indenture, andthereafter “Company” shall mean such successor Company.

 

“Conversion Rate” meansthe number of shares of Common Stock into which each Security is convertible,and shall equal the quotient obtained by dividing $1,000 by the then currentConversion Price.

 

“Corporate Trust Office”means the principal office of the Trustee at which at any particular time itscorporate trust business shall be administered, which office at the date of theexecution of this Indenture is located at 550 S. Hope Street, Suite 500, LosAngeles, California 90071, Attention: Corporate Trust Services (UTStarcom, Inc.— 7/8% Convertible Subordinated Notes Due March 1, 2008) or at any other timeat such other address as the Trustee may designate from time to time by noticeto the Company.

 

“Default” or “default”means, when used with respect to the Securities, any event which is or, afternotice or passage of time or both, would be an Event of Default.

 

“Designated SeniorIndebtedness” means any particular Senior Indebtedness of the Company in which theinstrument creating or evidencing the same or the assumption or guaranteethereof (or any related agreements or documents to which the Company is aparty) expressly provides that such Senior Indebtedness shall be “DesignatedSenior Indebtedness” for purposes of this Indenture (providedthatsuch instrument, agreement or other document may place limitations andconditions on the right of such Senior Indebtedness to exercise the rights ofDesignated Senior Indebtedness). If any payment made to any holder of anyDesignated Senior Indebtedness or its Representative with respect to suchDesignated Senior Indebtedness is rescinded or must otherwise be returned bysuch holder or Representative upon the insolvency, bankruptcy or reorganizationof the Company or otherwise, the reinstated Indebtedness of the Company arisingas a result of such rescission or return shall constitute Designated SeniorIndebtedness effective as of the date of such rescission or return.

 

“Exchange Act” means theSecurities and Exchange Act of 1934, as amended, and the rules and regulationspromulgated thereunder, as in effect from time to time.

 

“Final Maturity Date”means March 1, 2008.

 

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“GAAP” means generallyaccepted accounting principles in the United States of America as in effect asof the date of this Indenture, including those set forth in (1) theopinions and pronouncements of the Accounting Principles Board of the AmericanInstitute of Certified Public Accountants, (2) the statements andpronouncements of the Financial Accounting Standards Board, (3) such otherstatements by such other entity as approved by a significant segment of theaccounting profession and (4) the rules and regulations of the SECgoverning the inclusion of financial statements (including pro forma financialstatements) in registration statements filed under the Securities Act andperiodic reports required to be filed pursuant to Section 13 of theExchange Act, including opinions and pronouncements in staff accountingbulletins and similar written statements from the accounting staff of the SEC.

 

“Global Security” means apermanent Global Security that is in substantially the form attached hereto as Exhibit Aand that includes the information and schedule called for by footnotes 1,3 and 4 thereof and which is deposited with the Depositary or its custodian andregistered in the name of the Depositary or its nominee.

 

“Holder” or“Securityholder” means the person in whose name a Security is registered on thePrimary Registrar’s books.

 

“Indebtedness” means,with respect to any Person, without duplication, (a) all indebtedness,obligations and other liabilities (contingent or otherwise) of such Person (i)for borrowed money (including obligations of such Person in respect ofoverdrafts, foreign exchange contracts, currency exchange agreements, interestrate protection agreements, and any loans or advances from banks, whether ornot evidenced by notes or similar instruments) or (ii) evidenced by credit orloan agreements, bonds, debentures, notes or similar instruments (whether ornot the recourse of the lender is to the whole of the assets of such Person orto only a portion thereof) (other than any accounts payable or other accruedcurrent liability or obligation incurred in the ordinary course of business inconnection with the obtaining of materials or services), (b) allreimbursement obligations and other liabilities (contingent or otherwise) ofsuch Person with respect to letters of credit, bank guarantees or bankers’acceptances, (c) all obligations and liabilities (contingent or otherwise)of such Person (i) in respect of leases of such Person required, in conformitywith GAAP, to be accounted for as capitalized lease obligations on the balancesheet of such Person (as determined by such Person), or (ii) under anylease or related document (including a purchase agreement, conditional sale orother title retention agreement) in connection with the lease of real propertyor improvements thereon (or any personal property included as part of any suchlease) which provides that such Person is contractually obligated to purchaseor cause a third party to purchase the leased property or pay an agreed uponresidual value of the leased property to the lessor (whether or not such leasetransaction is characterized as an operating lease or a capitalized lease inaccordance with GAAP), (d) all obligations (contingent or otherwise) ofsuch Person with respect to any interest rate or other swap, cap, floor orcollar agreement, hedge agreement, forward contract, or other similarinstrument or agreement or foreign currency hedge, exchange, purchase orsimilar instrument or agreement; (e) all direct or indirect guaranties orsimilar agreements by such Person in respect of, and obligations or liabilitiesof such Person to purchase or otherwise acquire or otherwise assure a creditoragainst loss in respect of, indebtedness, obligations or liabilities of anotherPerson of the kinds described in clauses (a) through (d), and (f) any andall deferrals, renewals, extensions, refinancings and refundings of, oramendments, modifications or supplements to, any indebtedness, obligation orliability of the kinds described in clauses (a) through (e).

 

“Indenture” means thisIndenture as amended or supplemented from time to time pursuant to the terms ofthis Indenture.

 

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“Initial Purchasers”means Banc of America Securities LLC, Credit Suisse First Boston LLC andMerrill Lynch, Pierce, Fenner & Smith Incorporated.

 

“Officer” means theChairman or any Co-Chairman of the Board, any Vice Chairman of the Board, theChief Executive Officer, the President, any Vice President, the Chief FinancialOfficer, the Secretary or any Assistant Secretary of the Company.

 

“Officers’ Certificate”means a certificate signed by two Officers; provided, however,that for purposes of Sections 4.11 and 6.3, “Officers’ Certificate” meansa certificate signed by the principal executive officer, principal financialofficer or principal accounting officer of the Company and by one otherOfficer.

 

“Opinion of Counsel”means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company or theTrustee.

 

“Person” or “person”means any individual, corporation, partnership, limited liability company,joint venture, association, joint-stock company, trust, unincorporatedorganization, government or any agency or political subdivision thereof or anyother entity.

 

“Principal” or“principal” of a debt security, including the Securities, means the principalof the security plus, when appropriate, the premium, if any, on the security.

 

“Registration RightsAgreement” means the Registration Rights Agreement dated, as of March 12,2003, between the Company and the Initial Purchasers.

 

“Representative” meansthe (a) indenture trustee or other trustee, agent or representative forany Senior Indebtedness or (b) with respect to any Senior Indebtednessthat does not have any such trustee, agent or other representative, (i) inthe case of such Senior Indebtedness issued pursuant to an agreement providingfor voting arrangements as among the holders or owners of such SeniorIndebtedness, any holder or owner of such Senior Indebtedness acting with theconsent of the required persons necessary to bind such holders or owners ofsuch Senior Indebtedness and (ii) in the case of all other such SeniorIndebtedness, the holder or owner of such Senior Indebtedness.

 

“Restricted GlobalSecurity” means a Global Security that is a Restricted Security.

 

“Restricted Security”means a Security required to bear the restricted legend set forth in the formof Security set forth in Exhibit A of this Indenture.

 

“Rule 144” meansRule 144 under the Securities Act or any successor to such Rule.

 

“Rule 144A” meansRule 144A under the Securities Act or any successor to such Rule.

 

“SEC” means theSecurities and Exchange Commission.

 

“Securities” means the7/8% Convertible Subordinated Notes due 2008 or any of them (each, a“Security”), as amended or supplemented from time to time, that are issuedunder this Indenture.

 

“Securities Act” meansthe Securities Act of 1933, as amended, and the rules and regulationspromulgated thereunder, as in effect from time to time.

 

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“Securities Custodian”means the Trustee, as custodian with respect to the Securities in global form,or any successor thereto.

 

“Senior Indebtedness”means the principal of, premium, if any, interest (including all interest accruingsubsequent to the commencement of any bankruptcy or similar proceeding, whetheror not a claim for post-petition interest is allowed as a claim in any suchproceeding) and rent payable on or in connection with, and all fees, costs,expenses and other amounts accrued or due on or in connection with,Indebtedness of the Company, whether secured or unsecured, absolute orcontingent, due or to become due, outstanding on the date of this Indenture orthereafter created, incurred, assumed, guaranteed or in effect guaranteed bythe Company (including all deferrals, renewals, extensions or refundings of, oramendments, modifications or supplements to, the foregoing), unless in the caseof any particular Indebtedness the instrument creating or evidencing the sameor the assumption or guarantee thereof expressly provides that suchIndebtedness shall not be senior in right of payment to the Securities orexpressly provides that such Indebtedness is “pari passu” or “junior” to theSecurities. Notwithstanding the foregoing, the term Senior Indebtedness shallnot include (i) any Indebtedness of the Company to any Subsidiary of theCompany (other than Indebtedness of the Company to such Subsidiary arising byreason of guarantees by the Company of Indebtedness of such Subsidiary to aPerson that is not a Subsidiary of the Company) or (ii) theSecurities.  If any payment made to anyholder of any Senior Indebtedness or its Representative with respect to suchSenior Indebtedness is rescinded or must otherwise be returned by such holderor Representative upon the insolvency, bankruptcy or reorganization of theCompany or otherwise, the reinstated Indebtedness of the Company arising as aresult of such rescission or return shall constitute Senior Indebtednesseffective as of the date of such rescission or return.

 

“Significant Subsidiary”means, in respect of any Person, a Subsidiary of such Person that wouldconstitute a “significant subsidiary” as such term is defined under Rule 1-02of Regulation S-X under the Securities Act and the Exchange Act.

 

“Subsidiary” means, inrespect of any Person, any corporation, association, partnership or otherbusiness entity of which more than 50% of the total voting power of shares ofCapital Stock or other interests (including partnership interests) entitled(without regard to the occurrence of any contingency) to vote in the electionof directors, managers, general partners or trustees thereof is at the timeowned or controlled, directly or indirectly, by (i) such Person;(ii) such Person and one or more Subsidiaries of such Person; or(iii) one or more Subsidiaries of such Person.

 

“TIA” means the TrustIndenture Act of 1939, as amended, and the rules and regulations thereunder asin effect on the date of this Indenture, except as provided inSection 11.3, and except to the extent any amendment to the TrustIndenture Act expressly provides for application of the Trust Indenture Act asin effect on another date.

 

“Trading Day” means, withrespect to any security, each Monday, Tuesday, Wednesday, Thursday and Friday,other than any day on which securities are not generally traded on theprincipal exchange or market in which such security is traded.

 

“Trustee” means the partynamed as such in the first paragraph of this Indenture until a successorreplaces it in accordance with the provisions of this Indenture, and thereaftermeans the successor.

 

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“Trust Officer” means,with respect to the Trustee, any officer assigned to the Corporate Trust Office,and also, with respect to a particular matter, any other officer to whom suchmatter is referred because of such officer’s knowledge of and familiarity withthe particular subject.

 

“UnrestrictedCertificated Security” means a Certificated Security that is not a RestrictedSecurity.

 

“Unrestricted GlobalSecurity” means a Global Security that is not a Restricted Security.

 

“Vice President” whenused with respect to the Company or the Trustee, means any vice president,whether or not designated by a number or a word or words added before or afterthe title “vice president.”

 

“Voting Stock” of aPerson means all classes of Capital Stock or other interests (includingpartnership interests) of such Person then outstanding and normally entitled(without regard to the occurrence of any contingency) to vote in the electionof directors.

 

**SECTION 1.2.   OTHER DEFINITIONS.**

 
| **Term**                                       |   | **Defined in  Section** |
|------------------------------------------------|--------|-------------------------|
|                                           |   |                    |   |
| “Agent Members”                      |   |                    | 2.1(b) |
| “Bankruptcy Law”                     |   |                    | 8.1 |
| “Change in Control”                  |   |                    | 3.2(a) |
| “Change in Control  Purchase Date”   |   |                    | 3.2(a) |
| “Change in Control  Purchase Notice” |   |                    | 3.2(c) |
| “Change in Control  Purchase Price”  |   |                    | 3.2(a) |
| “Closing Price”                      |   |                    | 4.6(d) |
| “Company Order”                      |   |                    | 2.2 |
| “Conversion Agent”                   |   |                    | 2.3 |
| “Conversion Date”                    |   |                    | 4.2 |
| “Conversion Price”                   |   |                    | 4.6 |
| “Conversion Value”                   |   |                    | 4.1 |
| “Current Market Price”               |   |                    | 4.6(d) |
| “Custodian”                          |   |                    | 8.1 |
| “DTC”                                |   |                    | 2.1 |
| “Depositary”                         |   |                    | 2.1 |
| “Determination Date”                 |   |                    | 4.6(c) |
| “Event of Default”                   |   |                    | 8.1 |
| “Expiration Date”                    |   |                    | 4.6(c) |
| “Expiration Time”                    |   |                    | 4.6(c) |
| “Legal Holiday”                      |   |                    | 12.7 |
| “Legend”                             |   |                    | 2.12 |
| “NNM”                                |   |                    | 4.6(d) |
| “Paying Agent”                       |   |                    | 2.3 |
| “Payment Blockage  Notice”           |   |                    | 5.2 |
| “Primary Registrar”                  |   |                    | 2.3 |
| “Purchase Agreement”                 |   |                    | 2.1 |
| “Purchased Shares”                   |   |                    | 4.6(c) |

 

6

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| **Term**                             |   | **Defined in  Section** |
|--------------------------------------|--------|-------------------------|
| “QIB”                      |   |                    | 2.1 |
| “Registrar”                |   |                    | 2.3 |
| “Rights Plan”              |   |                    | 4.6(c) |
| “Trading Price”            |   |                    | 4.1 |
| “Triggering  Distribution” |   |                    | 4.6(c) |
| “Trigger Event”            |   |                    | 4.6(c) |
| “Unissued Shares”          |   |                    | 3.2(a) |

 

**SECTION1.3.   TRUST INDENTURE ACT PROVISIONS.**

 

Whenever this Indenturerefers to a provision of the TIA, that provision is incorporated by referencein and made a part of this Indenture. The Indenture shall also include those provisions of the TIA required tobe included herein by the provisions of the Trust Indenture Reform Act of 1990.  The following TIA terms used in thisIndenture have the following meanings:

 

“indenture securities”means the Securities;

 

“indenture securityholder” means a Securityholder;

 

“indenture to bequalified” means this Indenture;

 

“indenture trustee” or“institutional trustee” means the Trustee; and “obligor” on the indenturesecurities means the Company or any other obligor on the Securities.

 

All other terms used inthis Indenture that are defined in the TIA, defined by TIA reference to anotherstatute or defined by any SEC rule and not otherwise defined herein have themeanings assigned to them therein.

 

**SECTION1.4.   RULES OF CONSTRUCTION.**

 

Unless the contextotherwise requires:

#####  

##### (A)                                                      aterm has the meaning assigned to it;

 

##### (B)                                                        anaccounting term not otherwise defined has the meaning assigned to it inaccordance with GAAP;

#####  

##### (C)                                                        wordsin the singular include the plural, and words in the plural include thesingular;

#####  

##### (D)                                                       provisionsapply to successive events and transactions;

#####  

##### (E)                                                         theterm “merger” includes a statutory share exchange and the term “merged” has acorrelative meaning;

#####  

##### (F)                                                         themasculine gender includes the feminine and the neuter;

 

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##### (G)                                                        referencesto agreements and other instruments include subsequent amendments thereto; and

#####  

##### (H)                                                       “herein,”“hereof” and other words of similar import refer to this Indenture as a wholeand not to any particular Article, Section or other subdivision.

 

# **ARTICLE 2THE SECURITIES**

 

**SECTION 2.1.   FORM AND DATING.**

 

The Securities and theTrustee’s certificate of authentication shall be substantially in therespective forms set forth in Exhibit A, which Exhibit isincorporated in and made part of this Indenture. The Securities may havenotations, legends or endorsements required by law, stock exchange rule or usage.  The Company shall provide any suchnotations, legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of itsauthentication.  The Securities arebeing offered and sold by the Company pursuant to a Purchase Agreement, datedMarch 7, 2003 (the “Purchase Agreement”), between the Company and the InitialPurchasers, in transactions exempt from, or not subject to, the registrationrequirements of the Securities Act.

###  

### (a)          Restricted GlobalSecurities.  All of the Securities areinitially being offered and sold to qualified institutional buyers as definedin Rule 144A (collectively, “QIBs” or individually, each a “QIB”) inreliance on Rule 144A under the Securities Act and shall be issuedinitially in the form of one or more Restricted Global Securities, which shallbe deposited on behalf of the purchasers of the Securities represented therebywith the Trustee, at its Corporate Trust Office, as custodian for thedepositary, The Depository Trust Company (“DTC”) (such depositary, or anysuccessor thereto, being hereinafter referred to as the “Depositary”), andregistered in the name of its nominee, Cede & Co., duly executed bythe Company and authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of theRestricted Global Securities may from time to time be increased or decreased byadjustments made on the records of the Securities Custodian as hereinafterprovided, subject in each case to compliance with the Applicable Procedures.

###  

### (b)         Global Securities InGeneral.  Each Global Security shallrepresent such of the outstanding Securities as shall be specified therein andeach shall provide that it shall represent the aggregate amount of outstandingSecurities from time to time endorsed thereon and that the aggregate amount ofoutstanding Securities represented thereby may from time to time be reduced orincreased, as appropriate, to reflect exchanges, purchases or conversions ofsuch Securities.   Any adjustment of theaggregate principal amount of a Global Security to reflect the amount of anyincrease or decrease in the amount of outstanding Securities representedthereby shall be made by the Trustee in accordance with instructions given bythe Holder thereof as required by Section 2.12 hereof and shall be made on therecords of the Trustee and the Depositary.

 

Members of, orparticipants in, the Depositary (“Agent Members”) shall have no rights underthis Indenture with respect to any Global Security held on their behalf by theDepositary or under the Global Security, and the Depositary (including, forthis purpose, its nominee) may be treated by the Company, the Trustee and anyagent of the Company or the Trustee as the absolute owner and Holder of suchGlobal Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A) prevent theCompany, the Trustee or any agent of the Company or the Trustee from givingeffect to any written certification, proxy or other authorization furnished bythe Depositary or (B) impair, as between the

 

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Depositary and its AgentMembers, the operation of customary practices governing the exercise of therights of a Holder of any Security.

 

### (c)          Book Entry Provisions.The Company shall execute and the Trustee shall, in accordance with thisSection 2.1(c), authenticate and deliver initially one or more GlobalSecurities that (i) shall be registered in the name of the Depositary,(ii) shall be delivered by the Trustee to the Depositary or pursuant to theDepositary’s instructions and (iii) shall bear legends substantially tothe following effect:

###  

### “UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZEDREPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO UTSTARCOM, INC. (THE“COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, ANDANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCHOTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCHOTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISEBY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &CO., HAS AN INTEREST HEREIN.  THISSECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTERREFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEETHEREOF.  THIS SECURITY IS EXCHANGEABLEFOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY ORITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND,UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES INDEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THEDEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TOTHE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANYSUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSORDEPOSITARY.”

 

**SECTION2.2.   EXECUTION AND AUTHENTICATION.**

 

An Officer shall sign theSecurities for the Company by manual or facsimile signature attested by themanual or facsimile signature of the Secretary or an Assistant Secretary of theCompany.  Typographic and other minorerrors or defects in any such facsimile signature shall not affect the validityor enforceability of any Security which has been authenticated and delivered bythe Trustee.

 

If an Officer whosesignature is on a Security no longer holds that office at the time the Trusteeauthenticates the Security, the Security shall be valid nevertheless.

 

A Security shall not bevalid until an authorized signatory of the Trustee manually signs thecertificate of authentication on the Security. The signature shall be conclusive evidence that the Security has beenauthenticated under this Indenture.

 

The Trustee shallauthenticate and make available for delivery Securities for original issue inthe aggregate principal amount of up to $402,500,000 upon receipt of a writtenorder or orders of the Company signed by two Officers of the Company (a“Company Order”).  The Company Ordershall specify the amount of Securities to be authenticated, shall provide thatall such Securities will be represented by a Restricted Global Security and thedate on which each original issue of Securities is to be authenticated.  The aggregate

 

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principal amount ofSecurities outstanding at any time may not exceed $402,500,000 except as providedin Section 2.7.

 

The Trustee shall act asthe initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptableto the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trusteemay do so.  Each reference in thisIndenture to authentication by the Trustee includes authentication by suchagent.  An authenticating agent shallhave the same rights as an Agent to deal with the Company or an Affiliate ofthe Company.

 

The Securities shall beissuable only in registered form without coupons and only in denominations of$1,000 principal amount and any integral multiple thereof.

 

**SECTION 2.3.****   REGISTRAR,PAYING AGENT AND CONVERSION AGENT.**

 

The Company shallmaintain one or more offices or agencies where Securities may be presented forregistration of transfer or for exchange (each, a “Registrar”), one or moreoffices or agencies where Securities may be presented for payment (each, a“Paying Agent”), one or more offices or agencies where Securities may bepresented for conversion (each, a “Conversion Agent”) and one or more officesor agencies where notices and demands to or upon the Company in respect of theSecurities and this Indenture may be served. The Company will at all times maintain a Paying Agent, Conversion Agent,Registrar and an office or agency where notices and demands to or upon theCompany in respect of the Securities and this Indenture may be served in theBorough of Manhattan, The City of New York. One of the Registrars (the “PrimaryRegistrar”) shall keep a register of the Securities and of their transfer andexchange.

 

The Company shall enterinto an appropriate agency agreement with any Agent not a party to thisIndenture.  The agreement shallimplement the provisions of this Indenture that relate to such Agent.  The Company shall notify the Trustee of thename and address of any Agent not a party to this Indenture.  If the Company fails to maintain aRegistrar, Paying Agent, Conversion Agent or agent for service of notices anddemands in any place required by this Indenture, or fails to give the foregoingnotice, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent(except for the purposes of Section 6.1 and Article 10).

 

The Company herebyinitially designates the Trustee as Paying Agent, Registrar, Custodian andConversion Agent, and each of the Corporate Trust Office of the Trustee and theoffice or agency of the Trustee in the Borough of Manhattan, The City of NewYork (which shall initially be the office of the Trustee located at 100 WallStreet, Suite 1600, New York, New York 10005, Attention: Corporate TrustServices (UTStarcom, Inc. —  7/8%Convertible Subordinated Notes due 2008)), one such office or agency of theCompany for each of the aforesaid purposes.

 

**SECTION2.4.   PAYING AGENT TO HOLD MONEY INTRUST.**

 

Prior to 11:00 a.m., NewYork City time, on each due date of the principal of or interest, if any, onany Securities, the Company shall deposit with a Paying Agent a sum sufficientto pay such principal or interest, if any, so becoming due.  Subject to Section 5.2, a Paying Agentshall hold in trust for the benefit of Securityholders or the Trustee all moneyheld by the Paying Agent for the payment of principal of or interest, if any,on the Securities, and shall notify the Trustee of any default by the Company(or any other obligor on the Securities) in making any such payment.  If the Company or an Affiliate of theCompany acts as Paying Agent, it shall, before 11:00 a.m., New York City time,on each due date of the principal of or interest on any

 

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Securities, segregate themoney and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money heldby it to the Trustee, and the Trustee may at any time during the continuance ofany default, upon written request to a Paying Agent, require such Paying Agentto pay forthwith to the Trustee all sums so held in trust by such PayingAgent.  Upon doing so, the Paying Agent(other than the Company) shall have no further liability for the money.

 

**SECTION2.5.   SECURITYHOLDER LISTS.**

 

The Trustee shallpreserve in as current a form as is reasonably practicable the most recent listavailable to it of the names and addresses of Securityholders.  If the Trustee is not the Primary Registrar,the Company shall furnish to the Trustee on or before each semiannual interestpayment date, and at such other times as the Trustee may request in writing, alist in such form and as of such date as the Trustee may reasonably require ofthe names and addresses of Securityholders.

 

**SECTION2.6.   TRANSFER AND EXCHANGE.**

###  

### (a)          Subject to compliancewith any applicable additional requirements contained in Section 2.12,when a Security is presented to a Registrar with a request to register atransfer thereof or to exchange such Security for an equal principal amount ofSecurities of other authorized denominations (if any), the Registrar shall registerthe transfer or make the exchange as requested; provided, however,that every Security presented or surrendered for registration of transfer orexchange shall be duly endorsed or accompanied by an assignment form and, ifapplicable, a transfer certificate each in the form included in Exhibit A,and in form satisfactory to the Registrar duly executed by the Holder thereofor its attorney duly authorized in writing. To permit registration of transfers and exchanges, upon surrender of anySecurity for registration of transfer or exchange at an office or agencymaintained pursuant to Section 2.3, the Company shall execute and theTrustee shall authenticate Securities of a like aggregate principal amount atthe Registrar’s request.  Any exchangeor transfer shall be without charge, except that the Company or the Registrarmay require payment of a sum sufficient to cover any tax or other governmentalcharge that may be imposed in relation thereto, and provided, thatthis sentence shall not apply to any exchange pursuant to Section 2.10,2.12(a), 3.5, 4.2 (last paragraph) or 11.5.

 

Neither the Company, anyRegistrar nor the Trustee shall be required to exchange or register a transferof any Securities or portions thereof in respect of which a Change in Control PurchaseNotice has been delivered and not withdrawn by the Holder thereof (except, inthe case of the purchase of a Security in part, the portion thereof not to bepurchased).

 

All Securities issuedupon any transfer or exchange of Securities shall be valid obligations of theCompany, evidencing the same debt and entitled to the same benefits under thisIndenture, as the Securities surrendered upon such transfer or exchange.

###  

### (b)         Any Registrar appointedpursuant to Section 2.3 hereof shall provide to the Trustee suchinformation as the Trustee may reasonably require in connection with thedelivery by such Registrar of Securities upon transfer or exchange ofSecurities.

###  

### (c)          The Trustee shall haveno obligation or duty to monitor, determine or inquire as to compliance withany restrictions on transfer imposed under this Indenture or under applicablelaw with respect to any transfer of any interest in any Security (including anytransfers between or among Agent Members or other beneficial owners ofinterests in any Global Security) other than to require delivery of suchcertificates and

 

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### other documentation orevidence as are expressly required by, and to do so if and when expresslyrequired by the terms of, this Indenture, and to examine the same to determinesubstantial compliance as to form with the express requirements hereof.

 

**SECTION2.7.   REPLACEMENT SECURITIES.**

 

If any mutilated Securityis surrendered to the Company, a Registrar or the Trustee, or the Company, aRegistrar and the Trustee receive evidence to their satisfaction of thedestruction, loss or theft of any Security, and there is delivered to theCompany, the applicable Registrar and the Trustee such security or indemnity aswill be required by them to save each of them harmless, then, in the absence ofnotice to the Company, such Registrar or the Trustee that such Security hasbeen acquired by a bona fide purchaser, the Company shall execute, and upon itswritten request the Trustee shall authenticate and deliver, in exchange for anysuch mutilated Security or in lieu of any such destroyed, lost or stolenSecurity, a new Security of like tenor and principal amount, bearing a numbernot contemporaneously outstanding.

 

In case any suchmutilated, destroyed, lost or stolen Security has become or is about to becomedue and payable, or is about to be purchased by the Company pursuant toArticle 3, the Company in its discretion may, instead of issuing a newSecurity, pay or purchase such Security, as the case may be.

 

Upon the issuance of anynew Securities under this Section 2.7, the Company may require the paymentof a sum sufficient to cover any tax or other governmental charge that may beimposed in relation thereto and any other reasonable expenses (including thereasonable fees and expenses of the Trustee or the Registrar) in connectiontherewith.

 

Every new Security issuedpursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost orstolen Security shall constitute an original additional contractual obligationof the Company, whether or not the mutilated, destroyed, lost or stolenSecurity shall be at any time enforceable by anyone, and shall be entitled toall benefits of this Indenture equally and proportionately with any and all otherSecurities duly issued hereunder.

 

The provisions of thisSection 2.7 are (to the extent lawful) exclusive and shall preclude (tothe extent lawful) all other rights and remedies with respect to thereplacement or payment of mutilated, destroyed, lost or stolen Securities.

 

**SECTION2.8.   OUTSTANDING SECURITIES.**

 

Securities outstanding atany time are all Securities authenticated by the Trustee, except for thosecanceled by it, those converted pursuant to Article IV, those delivered to itfor cancellation or surrendered for transfer or exchange and those described inthis Section 2.8 as not outstanding.

 

If a Security is replacedpursuant to Section 2.7, it ceases to be outstanding unless the Companyreceives proof satisfactory to it that the replaced Security is held by a bonafide purchaser.

 

If a Paying Agent (otherthan the Company or an Affiliate of the Company) holds on a Change in ControlPurchase Date or the Final Maturity Date money sufficient to pay the principalof (including premium, if any) and accrued interest on Securities (or portionsthereof) in respect of which a Change in Control Purchase Notice has beendelivered and not withdrawn payable on that date, then on and after such Changein Control Purchase Date or the final Maturity Date, as the case may be, suchSecurities (or portions thereof, as the case may be) shall cease to beoutstanding and interest on them shall cease to accrue.

 

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Subject to therestrictions contained in Section 2.9, a Security does not cease to beoutstanding because the Company or an Affiliate of the Company holds theSecurity.

 

**SECTION2.9.   TREASURY SECURITIES.**

 

In determining whetherthe Holders of the required principal amount of Securities have concurred in anynotice, direction, waiver or consent, Securities owned by the Company or anyother obligor on the Securities or by any Affiliate of the Company or of suchother obligor shall be disregarded, except that, for purposes of determiningwhether the Trustee shall be protected in relying on any such notice,direction, waiver or consent, only Securities which a Trust Officer of theTrustee actually knows are so owned shall be so disregarded.  Securities so owned which have been pledgedin good faith shall not be disregarded if the pledgee establishes to thesatisfaction of the Trustee the pledgee’s right so to act with respect to theSecurities and that the pledgee is not the Company or any other obligor on theSecurities or any Affiliate of the Company or of such other obligor.

 

**SECTION2.10.   TEMPORARY SECURITIES.**

 

Until definitiveSecurities are ready for delivery, the Company may prepare and execute, and,upon receipt of a Company Order, the Trustee shall authenticate and deliver,temporary Securities.  TemporarySecurities shall be substantially in the form of definitive Securities but mayhave variations that the Company with the consent of the Trustee considersappropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trusteeshall authenticate and deliver definitive Securities in exchange for temporarySecurities.

 

**SECTION 2.11.   CANCELLATION.**

 

The Company at any timemay deliver Securities to the Trustee for cancellation.  The Registrar, the Paying Agent and theConversion Agent shall forward to the Trustee or its agent any Securitiessurrendered to them for transfer, exchange, payment or conversion.  The Trustee and no one else shall cancel, inaccordance with its standard procedures, all Securities surrendered fortransfer, exchange, payment, conversion or cancellation and shall deliver thecanceled Securities to the Company.  AllSecurities which are purchased or otherwise acquired by the Company or any ofits Subsidiaries prior to the Final Maturity Date shall be delivered to theTrustee for cancellation, and the Company may not hold or resell suchSecurities or issue any new Securities to replace any such Securities or anySecurities that any Holder has converted pursuant to Article 4.

 

**SECTION2.12.   LEGEND; ADDITIONAL TRANSFER ANDEXCHANGE REQUIREMENTS.**

###  

### (a)          If Securities are issuedupon the transfer, exchange or replacement of Securities subject torestrictions on transfer and bearing the legends set forth on the forms ofSecurities attached hereto as Exhibit A (collectively, the“Legend”), or if a request is made to remove the Legend on a Security, theSecurities so issued shall bear the Legend, or the Legend shall not be removed,as the case may be, unless there is delivered to the Company and the Registrarsuch satisfactory evidence, which shall include an opinion of counsel ifrequested by the Company or such Registrar, as may be reasonably required bythe Company and the Registrar, that neither the Legend nor the restrictions ontransfer set forth therein are required to ensure that transfers thereof complywith the provisions of Rule 144A or Rule 144 under the Securities Act or thatsuch Securities are not “restricted” within the meaning of Rule 144 under theSecurities Act; provided

 

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### that nosuch evidence need be supplied in connection with the sale of such Securitypursuant to a registration statement that is effective at the time of suchsale.  Upon (i) provision of suchsatisfactory evidence if requested, or (ii) notification by the Company tothe Trustee and Registrar of the sale of such Security pursuant to aregistration statement that is effective at the time of such sale, the Trustee,at the written direction of the Company, shall authenticate and deliver aSecurity that does not bear the Legend. If the Legend is removed from the faceof a Security and the Security is subsequently held by an Affiliate of theCompany, the Legend shall be reinstated.

###  

### (b)         A Global Security may notbe transferred, in whole or in part, to any Person other than the Depositary ora nominee or any successor thereof, and no such transfer to any such otherPerson may be registered; providedthat the foregoing shall notprohibit any transfer of a Security that is issued in exchange for a GlobalSecurity but is not itself a Global Security. No transfer of a Security to anyPerson shall be effective under this Indenture or the Securities unless anduntil such Security has been registered in the name of such Person. Notwithstandingany other provisions of this Indenture or the Securities, transfers of a GlobalSecurity, in whole or in part, shall be made only in accordance with thisSection 2.12.

###  

### (c)          Subject to thesucceeding paragraph, every Security shall be subject to the restrictions ontransfer provided in the Legend other than a Restricted Global Security.  Whenever any Restricted Security other thana Restricted Global Security is presented or surrendered for registration oftransfer or for exchange for a Security registered in a name other than that ofthe Holder, such Security must be accompanied by a certificate in substantiallythe form set forth in Exhibit B, dated the date of such surrender andsigned by the Holder of such Security, as to compliance with such restrictionson transfer. The Registrar shall not be required to accept for suchregistration of transfer or exchange any Security not so accompanied by aproperly completed certificate.

###  

### (d)         The restrictions imposedby the Legend upon the transferability of any Security shall cease andterminate when such Security has been sold pursuant to an effectiveregistration statement under the Securities Act or transferred in compliancewith Rule 144 under the Securities Act (or any successor provision thereto) or,if earlier, upon the expiration of the holding period applicable to salesthereof under Rule 144(k) under the Securities Act (or any successorprovision). Any Security as to which such restrictions on transfer shall haveexpired in accordance with their terms or shall have terminated may, upon asurrender of such Security for exchange to the Registrar in accordance with theprovisions of this Section 2.12 (accompanied, in the event that suchrestrictions on transfer have terminated by reason of a transfer in compliancewith Rule 144 or any successor provision, by, if requested by the Company orthe Registrar, an opinion of counsel in form reasonably acceptable to theCompany and addressed to the Company, to the effect that the transfer of suchSecurity has been made in compliance with Rule 144 or such successorprovision), be exchanged for a new Security, of like tenor and aggregateprincipal amount, which shall not bear the restrictive Legend. The Companyshall inform the Trustee of the effective date of any registration statementregistering the Securities under the Securities Act. The Trustee shall not beliable for any action taken or omitted to be taken by it in good faith inaccordance with the aforementioned opinion of counsel or registrationstatement.

###  

### (e)          As used in the precedingtwo paragraphs of this Section 2.12, the term “transfer” encompasses any sale,pledge, transfer, hypothecation or other disposition of any Security.

###  

### (f)            The provisions ofclauses (i), (ii), (iii) and (iv) below shall apply only to Global Securities:

 

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###### (i)                                     Notwithstandingany other provisions of this Indenture or the Securities, a Global Securityshall not be exchanged in whole or in part for a Security registered in thename of any Person other than the Depositary or one or more nominees thereof, providedthat a Global Security may be exchanged for Securities registered in thenames of any person designated by the Depositary in the event that (A) theDepositary has notified the Company that it is unwilling or unable to continueas Depositary for such Global Security or such Depositary has ceased to be a“clearing agency” registered under the Exchange Act, and a successor Depositaryis not appointed by the Company within 90 days, (B) the Company hasprovided the Depositary with written notice that it has decided to discontinueuse of the system of book-entry transfer through the Depositary or anysuccessor Depositary or (C) an Event of Default has occurred and iscontinuing with respect to the Securities. Any Global Security exchangedpursuant to clauses (A) or (B) above shall be so exchanged in whole and not inpart, and any Global Security exchanged pursuant to clause (C) above maybe exchanged in whole or from time to time in part as directed by theDepositary. Any Security issued in exchange for a Global Security or anyportion thereof shall be a Global Security; provided that any such Security soissued that is registered in the name of a Person other than the Depositary ora nominee thereof shall not be a Global Security.

#####  

##### (ii)                                  Securitiesissued in exchange for a Global Security or any portion thereof shall be issuedin definitive, fully registered form, without interest coupons, shall have anaggregate principal amount equal to that of such Global Security or portionthereof to be so exchanged, shall be registered in such names and be in suchauthorized denominations as the Depositary shall designate and shall bear theapplicable legends provided for herein. Any Global Security to be exchanged inwhole shall be surrendered by the Depositary to the Trustee, as Registrar. Withregard to any Global Security to be exchanged in part, either such GlobalSecurity shall be so surrendered for exchange or, if the Trustee is acting ascustodian for the Depositary or its nominee with respect to such GlobalSecurity, the principal amount thereof shall be reduced, by an amount equal tothe portion thereof to be so exchanged, by means of an appropriate adjustmentmade on the records of the Trustee. Upon any such surrender or adjustment, theTrustee shall authenticate and deliver the Security issuable on such exchangeto or upon the order of the Depositary or an authorized representative thereof.

#####  

##### (iii)                               Subjectto the provisions of clause (v) below, the registered Holder may grantproxies and otherwise authorize any Person, including Agent Members and personsthat may hold interests through Agent Members, to take any action which aHolder is entitled to take under this Indenture or the Securities.

#####  

##### (iv)                              Inthe event of the occurrence of any of the events specified in clause (i)above, the Company will promptly make available to the Trustee a reasonablesupply of Certificated Securities in definitive, fully registered form, withoutinterest coupons.

#####  

##### (v)                                 NeitherAgent Members nor any other Persons on whose behalf Agent Members may act shallhave any rights under this Indenture with respect to any Global Securityregistered in the name of the Depositary or any nominee thereof, or under anysuch Global Security, and the Depositary or such nominee, as the case may be,may be treated by the Company, the Trustee and any agent of the Company or theTrustee as the absolute owner and holder of such Global Security for allpurposes whatsoever. Notwithstanding the foregoing, nothing herein shallprevent the Company, the Trustee or any agent of the

 

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##### Company or the Trusteefrom giving effect to any written certification, proxy or other authorizationfurnished by the Depositary or such nominee, as the case may be, or impair, asbetween the Depositary, its Agent Members and any other person on whose behalfan Agent Member may act, the operation of customary practices of such Personsgoverning the exercise of the rights of a holder of any Security.

 

**SECTION 2.13.   CUSIP NUMBERS.**

 

The Company in issuingthe Securities may use one or more “CUSIP” numbers (if then generally in use),and, if so, the Trustee shall use “CUSIP” numbers in notices of purchase as aconvenience to Holders; providedthat any such notice may statethat no representation is made as to the correctness of such numbers either asprinted on the Securities or as contained in any notice of a purchase and thatreliance may be placed only on the other identification numbers printed on theSecurities, and any such purchase shall not be affected by any defect in oromission of such numbers.  The Companywill promptly notify the Trustee of any change in the “CUSIP” numbers.

 

# **ARTICLE3REDEMPTION AND PURCHASES**

 

**SECTION3.1.   NO REDEMPTION BY THE COMPANY.**

 

The Securities may not beredeemed by the Company prior to the Final Maturity Date.

 

**SECTION3.2.   PURCHASE OF SECURITIES AT OPTIONOF THE HOLDER UPON CHANGE IN CONTROL.**

 

If at any time thatSecurities remain outstanding there shall occur a Change in Control, Securitiesshall be purchased by the Company at the option of the Holders, in whole or inpart, as of the date that is 30 Business Days after the occurrence of theChange in Control (the “Change in Control Purchase Date”) at a purchase priceequal to 100% of the principal amount of the Securities, together with accruedand unpaid interest to, but excluding, the Change in Control Purchase Date (the“Change in Control Purchase Price”), subject to satisfaction by or on behalf ofany Holder of the requirements set forth in subsection (c) of this Section3.2.

 

The Company may elect topay the Change in Control Purchase Price by delivering shares of ApplicableStock in lieu of cash if and only if the following conditions are satisfied:

 

#### (1)          the shares of ApplicableStock deliverable in payment of the Change in Control Purchase Price shall havea fair market value as of the Change in Control Purchase Date of not less thanthe Change in Control Purchase Price. For purposes of this Section 3.2, thefair market value of shares of Applicable Stock shall be determined by theCompany and shall be equal to 97% of the average of the closing sale price ofshares of the Applicable Stock for the five consecutive Trading Days immediatelypreceding the second Trading Day prior to the Change in Control Purchase Date;

 

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#### (2)          the Change in ControlPurchase Price shall be paid only in cash in the event any shares of ApplicableStock to be issued upon repurchase of Securities hereunder (i) requireregistration under any federal securities law before such shares may be freelytransferable without being subject to any transfer restrictions under theSecurities Act upon repurchase and if such registration is not completed ordoes not become effective prior to the Change in Control Purchase Date, and/or(ii) require registration with or approval of any governmental authority underany state law or any other federal law before such shares may be validly issuedor delivered upon repurchase and if such registration is not completed or doesnot become effective or such approval is not obtained prior to the Change inControl Purchase Date;

####  

#### (3)          payment of the Change inControl Purchase Price may not be made in Applicable Stock unless such stockis, or shall have been listed on a national securities exchange or approved forquotation on the Nasdaq National Market, in either case, prior to the Change inControl Purchase Date; and

####  

#### (4)          all shares of ApplicableStock that may be issued upon repurchase of Securities will be issued out ofthe Company’s authorized but unissued Common Stock or, in the event of amerger, consolidation, or other similar transaction involving the Company thatis otherwise permitted under the terms of this Indenture in which the Companyis not the surviving corporation, out of the authorized but unissued commonstock, common equity interests, ordinary shares or depositary shares of thesurviving corporation or its direct or indirect parent corporation and, willupon issue, be duly and validly issued and fully paid and non-assessable andfree of any preemptive or similar rights.

 

If conditions (1) through(4) above are not satisfied in accordance with the terms thereof, the Change inControl Purchase Price shall be paid by the Company only in cash.

 

A “Change in Control”shall be deemed to have occurred if any of the following occurs after the datehereof:

####  

#### (1)          any “person” (as suchterm is defined below) is or becomes the “beneficial owner” (as defined below),directly or indirectly, through a purchase, merger or other acquisitiontransaction or series of transactions, of shares of Voting Stock of the Companyentitling the person to exercise 50% or more of the total voting power of alloutstanding classes of Voting Stock of the Company, other than an acquisitionby the Company, any of its Subsidiaries or any of its employee benefit plans;or

####  

#### (2)          the Company merges orconsolidates with or into any Person, any Person consolidates with or mergeswith or into the Company, or the Company conveys, sells, transfers or leasesall or substantially all of the assets of the Company to another Person otherthan to one or more of the Company’s wholly-owned subsidiaries, other thanpursuant to a transaction in which the Persons that “beneficially owned” (asdefined below), directly or indirectly, shares of Voting Stock of the Companyimmediately prior to such transaction have the entitlement to exercise,directly or indirectly, shares of Voting Stock of the Company representing 50%or more of the total voting power of all outstanding classes of Voting Stockentitled to vote generally in the election of directors of the continuing orsurviving Person immediately after such transaction.

 

For the purpose of thedefinition of “Change in Control,” (i) “person” has the meaning given suchterm under Section 13(d) of the Exchange Act or any successor provision tosuch provision and includes any syndicate or group which would be deemed to bea “person” under Section 13(d)(3) of the Exchange Act, and (ii) a“beneficial owner” shall be determined in accordance with Rule 13d-3 underthe Exchange Act, as in effect on the date of this Indenture, except that thenumber of shares of Voting Stock of the Company shall be

 

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deemed to include, inaddition to all outstanding shares of Voting Stock of the Company and UnissuedShares deemed to be held by the “person” (as such term is defined above) orother Person with respect to which the Change in Control determination is beingmade, all Unissued Shares deemed to be held by all other Persons.  The term “Unissued Shares” means shares ofVoting Stock not outstanding that are subject to options, warrants, rights topurchase or conversion privileges exercisable within 60 days of the date ofdetermination of a Change in Control.

 

Notwithstanding anythingto the contrary set forth in this Section 3.2, a Change in Control will not bedeemed to have occurred if either:

####  

#### (1)          the Closing Price(determined in accordance with Section 4.6(d) of this Indenture) of theCommon Stock for any five Trading Days within (i) the period of ten consecutiveTrading Days ending immediately after the later of the Change in Control or thepublic announcement of the Change in Control, in the case of a Change inControl relating to an acquisition of Capital Stock, or (ii) the period of tenconsecutive Trading Days ending immediately before the Change in Control, inthe case of a Change in Control relating to a merger, consolidation or assetsale, equals or exceeds 105% of the Conversion Price in effect on each of thoseTrading Days; or

####  

#### (2)          all of theconsideration, excluding cash payments for fractional shares and cash paymentsmade pursuant to dissenters’ appraisal rights, in a merger or consolidationotherwise constituting a Change of Control consists of shares of common stock,depository receipts or other certificates representing common equity intereststraded on a national securities exchange or quoted on the NNM, or will be sotraded or quoted immediately following such merger or consolidation, and as aresult of such merger or consolidation the Securities become convertible solelyinto such common stock, depositary shares or other certificates representingcommon equity interests.

###  

### (b)         Within 10 Business Daysafter the occurrence of a Change in Control, the Company shall mail a writtennotice of the Change in Control to the Trustee and to each Holder (and tobeneficial owners as required by applicable law).  The notice shall include the form of a Change in Control PurchaseNotice to be completed by the Holder and shall state:

####  

#### (1)          the date of such Changein Control and, briefly, the events causing such Change in Control;

####  

#### (2)          the date by which theChange in Control Purchase Notice pursuant to this Section 3.2 must be given;

####  

#### (3)          the Change in ControlPurchase Date;

####  

#### (4)          the Change in ControlPurchase Price, and whether the Change in Control Purchase Price shall be paidby the Company in cash or by delivery of shares of Applicable Stock;

####  

#### (5)          the Holder’s right torequire the Company to purchase the Securities;

####  

#### (6)          briefly, the conversionrights of the Securities;

####  

#### (7)          the name and address ofeach Paying Agent and Conversion Agent;

####  

#### (8)          the Conversion Price andany adjustments thereto;

 

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#### (9)          that Securities as towhich a Change in Control Purchase Notice has been given may be converted intoCommon Stock pursuant to Article 4 of this Indenture only to the extent thatthe Change in Control Purchase Notice has been withdrawn in accordance with theterms of this Indenture;

####  

#### (10)    the procedures that the Holdermust follow to exercise rights under this Section 3.2;

####  

#### (11)    the procedures for withdrawinga Change in Control Purchase Notice, including a form of notice of withdrawal;and

####  

#### (12)    that the Holder must satisfythe requirements set forth in the Securities in order to convert theSecurities.

 

If any of the Securitiesis in the form of a Global Security, then the Company shall modify such noticeto the extent necessary to accord with the procedures of the Depositaryapplicable to the repurchase of Global Securities.

###  

### (c)          A Holder may exerciseits rights specified in subsection (a) of this Section 3.2 upon deliveryof a written notice (which shall be in substantially the form included in ExhibitA hereto and which may be delivered by letter, overnight courier, handdelivery, facsimile transmission or in any other written form and, in the caseof Global Securities, may be delivered electronically or by other means inaccordance with the Depositary’s customary procedures) of the exercise of suchrights (a “Change in Control Purchase Notice”) to any Paying Agent at any timeprior to the close of business on the second Business Day next preceding theChange in Control Purchase Date.

 

The delivery of suchSecurity to any Paying Agent (together with all necessary endorsements) at theoffice of such Paying Agent shall be a condition to the receipt by the Holderof the Change in Control Purchase Price therefor.

 

The Company shallpurchase from the Holder thereof, pursuant to this Section 3.2, a portion of aSecurity if the principal amount of such portion is $1,000 or an integralmultiple of $1,000.  Provisions of theIndenture that apply to the purchase of all of a Security pursuant to Sections3.2 through 3.7 also apply to the purchase of such portion of such Security.

 

Notwithstanding anythingherein to the contrary, any Holder delivering to a Paying Agent the Change inControl Purchase Notice contemplated by this subsection (c) shall have theright to withdraw such Change in Control Purchase Notice in whole or in aportion thereof that is a principal amount of $1,000 or in an integral multiplethereof at any time prior to the close of business on the second Business Daynext preceding the Change in Control Purchase Date by delivery of a writtennotice of withdrawal to the Paying Agent in accordance with Section 3.3.

 

A Paying Agent shallpromptly notify the Company of the receipt by it of any Change in ControlPurchase Notice or written withdrawal thereof.

 

Anything herein to thecontrary notwithstanding, in the case of Global Securities, any Change inControl Purchase Notice may be delivered or withdrawn and such Securities maybe surrendered or delivered for purchase in accordance with the ApplicableProcedures as in effect from time to time.

 

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**SECTION3.3.   EFFECT OF CHANGE IN CONTROLPURCHASE NOTICE.**

 

Upon receipt by anyPaying Agent of the Change in Control Purchase Notice specified in Section3.2(c), the Holder of the Security in respect of which such Change in ControlPurchase Notice was given shall (unless such Change in Control Purchase Noticeis withdrawn as specified below) thereafter be entitled to receive the Changein Control Purchase Price with respect to such Security.  Such Change in Control Purchase Price shallbe paid to such Holder promptly following the later of (a) the Change inControl Purchase Date with respect to such Security (provided theconditions in Section 3.2(c) have been satisfied) and (b) the time ofdelivery of such Security to a Paying Agent by the Holder thereof in the mannerrequired by Section 3.2(c). Securities in respect of which a Change in Control Purchase Notice hasbeen given by the Holder thereof may not be converted into shares of CommonStock pursuant to Article 4 on or after the date of the delivery of such Changein Control Purchase Notice unless such Change in Control Purchase Notice hasfirst been validly withdrawn.

 

A Change in ControlPurchase Notice may be withdrawn by means of a written notice (which may bedelivered by mail, overnight courier, hand delivery, facsimile transmission orin any other written form and, in the case of Global Securities, may bedelivered electronically or by other means in accordance with the Depositary’scustomary procedures) of withdrawal delivered by the Holder to a Paying Agentat any time prior to the close of business on the second Business Dayimmediately preceding the Change in Control Purchase Date, specifying theprincipal amount of the Security or portion thereof (which must be a principalamount of $1,000 or an integral multiple of $1,000 in excess thereof) withrespect to which such notice of withdrawal is being submitted.

 

**SECTION3.4.   DEPOSIT OF CHANGE IN CONTROLPURCHASE PRICE.**

 

On or before 11:00 a.m.New York City time on the Change in Control Purchase Date, the Company shalldeposit with the Trustee or with a Paying Agent (other than the Company or anAffiliate of the Company) an amount of money (in immediately available funds ifdeposited on such Change in Control Purchase Date) sufficient to pay theaggregate Change in Control Purchase Price of all the Securities or portionsthereof that are to be purchased as of such Change in Control PurchaseDate.  The manner in which the depositrequired by this Section 3.4 is made by the Company shall be at the option ofthe Company, providedthat such deposit shall be made in a mannersuch that the Trustee or a Paying Agent shall have immediately available fundson the Change in Control Purchase Date.

 

If a Paying Agent holds,in accordance with the terms hereof, money sufficient to pay the Change inControl Purchase Price of any Security for which a Change in Control PurchaseNotice has been tendered and not withdrawn in accordance with this Indenturethen, on the Change in Control Purchase Date, such Security will cease to beoutstanding and the rights of the Holder in respect thereof shall terminate(other than the right to receive the Change in Control Purchase Price asaforesaid).  The Company shall publiclyannounce the principal amount of Securities purchased as a result of suchChange in Control on or as soon as practicable after the Change in ControlPurchase Date.

 

**SECTION3.5.   SECURITIES PURCHASED IN PART.**

 

Any Security that is tobe purchased only in part shall be surrendered at the office of a Paying Agent,and promptly after the Change in Control Purchase Date the Company shallexecute and the Trustee shall authenticate and deliver to the Holder of suchSecurity, without service charge, a new Security or Securities, of suchauthorized denomination or denominations as may be requested by such Holder, inaggregate

 

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principal amount equalto, and in exchange for, the portion of the principal amount of the Security sosurrendered that is not purchased.

 

**SECTION3.6.   COMPLIANCE WITH SECURITIES LAWSUPON PURCHASE OF SECURITIES.**

 

In connection with anyoffer to purchase or purchase of Securities under Section 3.2, the Companyshall (a) comply with Rule 13e-4 and Rule 14e-1 (or any successor toeither such Rule), if applicable, under the Exchange Act, (b) file therelated Schedule TO (or any successor or similar schedule, form or report) ifrequired under the Exchange Act, and (c) otherwise comply with all federaland state securities laws in connection with such offer to purchase or purchaseof Securities, all so as to permit the rights of the Holders and obligations ofthe Company under Sections 3.2 through 3.5 to be exercised in the time and inthe manner specified therein.

 

**SECTION3.7.   REPAYMENT TO THE COMPANY.**

 

To the extent that theaggregate amount of cash deposited by the Company pursuant to Section 3.4exceeds the aggregate Change in Control Purchase Price together with interest,if any, thereon of the Securities or portions thereof that the Company isobligated to purchase, then promptly after the Change in Control Purchase Datethe Trustee or a Paying Agent, as the case may be, shall return any such excesscash to the Company.

 

# **ARTICLE 4CONVERSION**

 

**SECTION4.1.   CONVERSION PRIVILEGE.**

 

Subject to the furtherprovisions of this Article 4 and paragraph 7 of the Securities, a Holder of aSecurity may convert the principal amount of such Security (or any portionthereof equal to $1,000 or any integral multiple of $1,000 in excess thereof)into Common Stock at any time prior to the close of business on the FinalMaturity Date, at the Conversion Price then in effect, if:

###  

### (a)          as of the last day ofthe immediately preceding fiscal quarter, the Closing Price (determined inaccordance with Section 4.6(d) of this Indenture) of the Common Stock for thelast Trading Day of such fiscal quarter was 110% or more of the then currentConversion Price on the Securities;

###  

### (b)         during the periodbeginning January 1, 2008 through the Final Maturity Date, the Closing Price ofthe Common Stock on the immediately preceding Trading Day was 110% of more ofthe then current Conversion Price on the Security;

###  

### (c)          the Company distributesto Holders of Common Stock rights entitling them to purchase Common Stock atless than the Closing Price of the Common Stock on the last Trading Daypreceding the declaration for such distribution;

###  

### (d)         the Company distributesto Holders of Common Stock assets, debt, securities or certain rights topurchase the Company’s securities, which distribution has a per share value asdetermined by the Board of Directors exceeding 10% of the Closing Price of theCommon Stock for the last Trading Day preceding the declaration for suchdistribution; or

 

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### (e)          the Company becomes aparty to a consolidation, merger or sale of all or substantially all of theCompany’s assets or a Change in Control occurs pursuant to which the CommonStock would be converted into cash, stock or other property unless all of theconsideration, excluding cash payments for fractional shares and cash paymentsmade pursuant to dissenters’ appraisal rights, in a merger or consolidationotherwise constituting a Change of Control consists of shares of common stock,depositary receipts or other certificates representing common equity intereststraded on a national securities exchange or quoted on the NNM, or will be sotraded immediately following such merger or consolidation, and as a result ofsuch merger or consolidation the Securities become convertible solely into suchcommon stock, depositary shares or other securities representing common equityinterests.

 

In the case of Sections4.1(c) and 4.1(d) above, the Company must notify Holders at least 20 days priorto the ex-dividend date for such distribution. Once the Company has given such notice, Holders may surrender theirSecurities for conversion at any time until the earlier of the close ofbusiness on the Business Day prior to the ex-dividend date or our announcementthat such distribution will not take place.

 

A Holder of a Securitymay also convert the principal amount of such Security (or any portion thereofequal to $1,000 or any integral multiple of $1,000 in excess thereof) intoCommon Stock:

###  

### (a)                                  atany time prior to March 1, 2006 after any five (5) consecutive Trading Dayperiod in which the average Trading Prices for the Securities for that five (5)Trading Day period was less than 103% of the average Conversion Value for theSecurities during that period; and

###  

### (b)                                 atany time on or after March 1, 2006 and prior to maturity after any five(5) consecutive Trading Day period in which the average Trading Prices for theSecurities for that five (5) Trading Day period was less than 97% of theaverage Conversion Value for the Securities during that period, however, aHolder may not convert a Security on or after March 1, 2006 pursuant to thisclause if, at the time of the calculation, the Closing Price of shares ofCommon Stock is between the then current Conversion Price on the Securities and110% of the then current Conversion Price of the Securities.

 

The “Conversion Value”for the Securities is equal to the product of (i) the Closing Price of theCommon Stock on a given day and (ii) the then current Conversion Rate.

 

The “Trading Price” ofthe Securities on any Trading Day means the average of the secondary market bidquotations per Security obtained by the Conversion Agent for $2,500,000principal amount of the Securities at approximately 3:30 p.m., New York Citytime, on such Trading Day from three independent nationally recognizedsecurities dealers the Company selects, providedthat if at leastthree such bids cannot reasonably be obtained by the Conversion Agent, but twosuch bids can be obtained, then the average of the two bids shall be used, andif only one such bid can reasonably be obtained by the Conversion Agent, thisone bid shall be used.  If theConversion Agent cannot reasonably obtain at least one bid for $2,500,000principal amount of the Securities from a nationally recognized securitiesdealer or in the Company’s reasonable judgment, the bid quotations are notindicative of the secondary market value of the Securities, then the tradingprice of the Securities will be deemed to be less than 97% of the ConversionValue for the Securities on such Trading Day. The Conversion Agent shall have no obligation to determine the tradingprice of the Securities unless the Company has requested such determination;and the Company shall have no obligation to make such request unless theHolders provide the Company with reasonable evidence that the trading price ofthe Securities would be less than 97% of the product of the Closing Price ofthe Common Stock and the number of shares issuable upon conversion of $1,000principal amount of the Securities; at which time, the Company shall instructthe Conversion Agent to determine the trading price of the Securities beginningon the

 

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next Trading Day and oneach successive Trading Day until the trading price is greater than or equal to97% of the product of the Closing Price of Common Stock and the number ofshares issuable upon conversion of $1,000 principal amount of the Securities.

 

If a Security issubmitted or presented for purchase pursuant to Article 3, the Holder’sconversion right shall terminate at the close of business on the Business Dayimmediately preceding the Change in Control Purchase Date for such Security orsuch earlier date as the Holder presents such Security for purchase (unless theCompany shall default in making the Change in Control Purchase Price paymentwhen due, in which case the conversion right shall terminate at the close ofbusiness on the date such default is cured and such Security ispurchased).  The number of shares ofCommon Stock issuable upon conversion of a Security shall be determined bydividing the principal amount of the Security or portion thereof surrenderedfor conversion by the Conversion Price in effect on the Conversion Date.  The initial Conversion Price is set forth inparagraph 7 of the Securities and is subject to adjustment as provided inthis Article 4.

 

Provisions of thisIndenture that apply to conversion of all of a Security also apply toconversion of a portion of a Security.

 

A Security in respect ofwhich a Holder has delivered a Change in Control Purchase Notice pursuant toSection 3.2(c) exercising the option of such Holder to require the Companyto purchase such Security may be converted, as provided in Section 4.1 of thisArticle 4, only if such Change in Control Purchase Notice is withdrawn by a writtennotice of withdrawal delivered to a Paying Agent prior to the close of businesson the second Business Day immediately preceding the Change in Control PurchaseDate in accordance with Section 3.3.

 

A Holder of Securities isnot entitled to any rights of a holder of Common Stock until such Holder hasconverted its Securities to Common Stock, and only to the extent suchSecurities are deemed to have been converted into Common Stock pursuant to thisArticle 4.

 

**SECTION4.2.   CONVERSION PROCEDURE.**

 

To convert a Security, aHolder must (a) complete and manually sign the conversion notice on theback of the Security and deliver such notice to a Conversion Agent,(b) surrender the Security to a Conversion Agent, (c) furnishappropriate endorsements and transfer documents if required by a Registrar or aConversion Agent, and (d) pay any transfer or similar tax, ifrequired.  The date on which the Holdersatisfies all of those requirements is the “Conversion Date.”  As soon as practicable after the ConversionDate, the Company shall deliver to the Holder through a Conversion Agent acertificate for the number of whole shares of Common Stock issuable upon theconversion and cash in lieu of any fractional shares pursuant toSection 4.3.  Anything herein tothe contrary notwithstanding, in the case of Global Securities, conversionnotices may be delivered and such Securities may be surrendered for conversionin accordance with the Applicable Procedures as in effect from time to time.

 

The person in whose namethe Common Stock certificate is registered shall be deemed to be a stockholderof record on the Conversion Date; provided, however, that nosurrender of a Security on any date when the stock transfer books of theCompany shall be closed shall be effective to constitute the person or personsentitled to receive the shares of Common Stock upon such conversion as therecord holder or holders of such shares of Common Stock on such date, but suchsurrender shall be effective to constitute the person or persons entitled toreceive such shares of Common Stock as the record holder or holders thereof forall purposes at the close of business on the next succeeding day on which suchstock transfer books are open;

 

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provided,further, that such conversion shall be at the Conversion Price in effecton the Conversion Date as if the stock transfer books of the Company had notbeen closed.  Upon conversion of aSecurity, such person shall no longer be a Holder of such Security.  No payment or adjustment will be made fordividends or distributions on shares of Common Stock issued upon conversion ofa Security.

 

Securities so surrenderedfor conversion (in whole or in part) during the period from the close ofbusiness on any regular record date to the opening of business on the nextsucceeding interest payment date (excluding Securities or portions thereofpresented for purchase upon a Change in Control on a Change in Control PurchaseDate during the period beginning at the close of business on a regular recorddate and ending at the opening of business on the first Business Day after thenext succeeding interest payment date, or if such interest payment date is nota Business Day, the second such Business Day) shall also be accompanied bypayment in funds acceptable to the Company of an amount equal to the interestpayable on such interest payment date on the principal amount of such Securitythen being converted, and such interest shall be payable to such registeredHolder notwithstanding the conversion of such Security, subject to theprovisions of this Indenture relating to the payment of defaulted interest bythe Company.  However, if a Holdersubmits Securities for conversion between the record date for the finalinterest payment and the opening of business on the Final Maturity Date, suchHolder will not be required to pay funds equal to the interest payable on theFinal Maturity Date.  Except asotherwise provided in this Section 4.2, no payment or adjustment will bemade for accrued interest on a converted Security.  If the Company defaults in the payment of interest payable onsuch interest payment date, the Company shall promptly repay such funds to suchHolder.

 

Nothing in thisSection shall affect the right of a Holder in whose name any Security isregistered at the close of business on a record date to receive the interestpayable on such Security on the related interest payment date in accordancewith the terms of this Indenture and the Securities. If a Holder converts more thanone Security at the same time, the number of shares of Common Stock issuableupon the conversion shall be based on the aggregate principal amount ofSecurities converted.

 

Upon surrender of aSecurity that is converted in part, the Company shall execute, and the Trusteeshall authenticate and deliver to the Holder, a new Security equal in principalamount to the unconverted portion of the Security surrendered.

 

**SECTION 4.3.   FRACTIONAL SHARES.**

 

The Company will notissue fractional shares of Common Stock upon conversion of Securities.  In lieu thereof, the Company will pay anamount in cash for the current market value of the fractional shares.  The current market value of a fractionalshare shall be determined, (calculated to the nearest 1/1000th of ashare) by multiplying the Closing Price (determined as set forth in Section4.6(d)) of the Common Stock on the Trading Day immediately prior to theConversion Date by such fractional share and rounding the product to thenearest whole cent.

 

**SECTION4.4.   TAXES ON CONVERSION.**

 

If a Holder converts aSecurity, the Company shall pay any documentary, stamp or similar issue ortransfer tax due on the issue of shares of Common Stock upon suchconversion.  However, the Holder shallpay any such tax which is due because the Holder requests the shares to beissued in a name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificate representingthe Common Stock being issued in a name other than the Holder’s name until theConversion Agent receives a sum sufficient to

 

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pay any tax which will bedue because the shares are to be issued in a name other than the Holder’sname.  Nothing herein shall preclude anytax withholding required by law or regulation.

 

**SECTION4.5.   COMPANY TO PROVIDE STOCK.**

 

The Company shall,prior to issuance of any Securities hereunder, and from time to time as may benecessary, reserve, out of its authorized but unissued Common Stock, asufficient number of shares of Common Stock to permit the conversion of alloutstanding Securities into shares of Common Stock.

 

All shares ofCommon Stock delivered upon conversion of the Securities shall be newly issuedshares, shall be duly authorized, validly issued, fully paid and nonassessableand shall be free from preemptive rights and free of any lien or adverse claim.

 

The Company willendeavor promptly to comply with all federal and state securities lawsregulating the offer and delivery of shares of Common Stock upon conversion ofSecurities, if any, and will list or cause to have quoted such shares of CommonStock on each national securities exchange or on the Nasdaq National Market orother over-the-counter market or such other market on which the Common Stock isthen listed or quoted; provided, however, that if rules of suchautomated quotation system or exchange permit the Company to defer the listingof such Common Stock until the first conversion of the Notes into Common Stockin accordance with the provisions of this Indenture, the Company covenants tolist such Common Stock issuable upon conversion of the Notes in accordance withthe requirements of such automated quotation system or exchange at suchtime.  Any Common Stock issued uponconversion of a Security hereunder which at the time of conversion was aRestricted Security will also be a Restricted Security.

 

**SECTION4.6.   ADJUSTMENT OF CONVERSION PRICE.**

 

The conversion price asstated in paragraph 7 of the Securities (the “Conversion Price”) shall beadjusted from time to time by the Company as follows:

###  

### (a)          In case the Companyshall (i) pay a dividend on its Common Stock in shares of Common Stock,(ii) make a distribution on its Common Stock in shares of Common Stock,(iii) subdivide its outstanding Common Stock into a greater number ofshares, or (iv) combine its outstanding Common Stock into a smaller numberof shares, the Conversion Price in effect immediately prior thereto shall beadjusted so that the Holder of any Security thereafter surrendered for conversionshall be entitled to receive that number of shares of Common Stock which itwould have owned had such Security been converted immediately prior to thehappening of such event.  An adjustmentmade pursuant to this subsection (a) shall become effective immediatelyafter the record date in the case of a dividend or distribution and shallbecome effective immediately after the effective date in the case ofsubdivision or combination.

 

### (b)         In case the Company shallissue rights or warrants to all or substantially all holders of its CommonStock entitling them (for a period of not more than 60 days after suchissuance) to subscribe for or purchase shares of Common Stock (or securitiesconvertible into Common Stock) at a price per share (or having a conversionprice per share) less than the Current Market Price per share of Common Stock(as determined in accordance with subsection (e) of this Section 4.6)on the record date for the determination of stockholders entitled to receivesuch rights or warrants, the Conversion Price in effect immediately priorthereto shall be adjusted so that the same shall equal the price determined bymultiplying the Conversion Price in effect immediately prior to such recorddate by a fraction of which the numerator shall be the number of shares ofCommon Stock outstanding on such record date plus the number of shares whichthe aggregate

 

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### offering price of thetotal number of shares of Common Stock so offered (or the aggregate conversionprice of the convertible securities so offered, which shall be determined bymultiplying the number of shares of Common Stock issuable upon conversion ofsuch convertible securities by the conversion price per share of Common Stockpursuant to the terms of such convertible securities) would purchase at theCurrent Market Price per share (as defined in subsection (e) of thisSection 4.6) of Common Stock on such record date, and of which thedenominator shall be the number of shares of Common Stock outstanding on suchrecord date plus the number of additional shares of Common Stock offered (orinto which the convertible securities so offered are convertible).  Such adjustment shall be made successivelywhenever any such rights or warrants are issued, and shall become effectiveimmediately after such record date.  Ifat the end of the period during which such rights or warrants are exercisablenot all rights or warrants shall have been exercised, the adjusted ConversionPrice shall be immediately readjusted to what it would have been based upon thenumber of additional shares of Common Stock actually issued (or the number ofshares of Common Stock issuable upon conversion of convertible securitiesactually issued).

###  

### (c)          In case the Companyshall distribute to all or substantially all holders of its Common Stock anyshares of capital stock of the Company (other than Common Stock), evidences ofindebtedness or other non-cash assets (including securities of any person otherthan the Company but excluding (1) dividends or distributions paidexclusively in cash or (2) dividends or distributions referred to insubsection (a) of this Section 4.6), or shall distribute to all orsubstantially all holders of its Common Stock rights or warrants to subscribefor or purchase any of its securities (excluding those rights and warrantsreferred to in subsection (b) of this Section 4.6 and also excludingthe distribution of rights to all holders of Common Stock pursuant to a RightsPlan (as defined below) adopted before or after the date of this Indenture),then in each such case the Conversion Price shall be adjusted so that the sameshall equal the price determined by multiplying the current Conversion Price bya fraction of which the numerator shall be the Current Market Price per share(as defined in subsection (e) of this Section 4.6) of the CommonStock on the record date mentioned below less the fair market value on suchrecord date (as determined by the Board of Directors, whose determination shallbe conclusive evidence of such fair market value and which shall be evidencedby an Officers’ Certificate delivered to the Trustee) of the portion of thecapital stock, evidences of indebtedness or other non-cash assets sodistributed or of such rights or warrants applicable to one share of CommonStock (determined on the basis of the number of shares of Common Stockoutstanding on the record date), and of which the denominator shall be theCurrent Market Price per share (as defined in subsection (e) of thisSection 4.6) of the Common Stock on such record date.  Such adjustment shall be made successivelywhenever any such distribution is made and shall become effective immediatelyafter the record date for the determination of shareholders entitled to receivesuch distribution.

 

In the event the thenfair market value (as so determined) of the portion of the capital stock,evidences of indebtedness or other non-cash assets so distributed or of suchrights or warrants applicable to one share of Common Stock is equal to or greaterthan the Current Market Price per share of the Common Stock on such recorddate, in lieu of the foregoing adjustment, adequate provision shall be made sothat each holder of a Security shall have the right to receive upon conversionthe amount of capital stock, evidences of indebtedness or other non-cash assetsso distributed or of such rights or warrants such holder would have receivedhad such holder converted each Security on such record date.  In the event that such distribution is notso paid or made, the Conversion Price shall again be adjusted to be theConversion Price which would then be in effect if such distribution had notbeen declared.  If the Board ofDirectors determines the fair market value of any distribution for purposes ofthis Section 4.6(c) by reference to the actual or when issued tradingmarket for any securities, it must in doing so consider the prices in suchmarket over the same period used in computing the Current Market Price of theCommon Stock.

 

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With respect to anyrights that may be issued or distributed pursuant to any rights plan that theCompany implements after the date of this Indenture (a “Rights Plan”), uponconversion of the Securities into Common Stock, to the extent that such RightsPlan is in effect upon such conversion, the holders of Securities will receive,in addition to the Common Stock, the rights described therein (whether or notthe rights have separated from the Common Stock at the time of conversion), subjectto the limitations set forth in any such Rights Plan.  Any distribution of rights or warrants pursuant to a Rights Plancomplying with the requirements set forth in the immediately preceding sentenceof this paragraph shall not constitute a distribution of rights or warrantspursuant to this Section 4.6(c).

 

Rights or warrants (otherthan rights issued pursuant to a Rights Plan) distributed by the Company to allholders of Common Stock entitling the holders thereof to subscribe for orpurchase shares of the Company’s capital stock (either initially or undercertain circumstances), which rights or warrants, until the occurrence of aspecified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of Common Stock;(ii) are not exercisable; and (iii) are also issued in respect offuture issuances of Common Stock, shall be deemed not to have been distributedfor purposes of this Section 4.6 (and no adjustment to the ConversionPrice under this Section 4.6 will be required) until the occurrence of theearliest Trigger Event, whereupon such rights and warrants shall be deemed tohave been distributed and an appropriate adjustment (if any is required) to theConversion Price shall be made under this Section 4.6(c).  If any such right or warrant, including anysuch existing rights or warrants distributed prior to the date of thisIndenture, are subject to events, upon the occurrence of which such rights orwarrants become exercisable to purchase different securities, evidences of indebtednessor other non-cash assets, then the date of the occurrence of any and each suchevent shall be deemed to be the date of distribution and record date withrespect to new rights or warrants with such rights (and a termination orexpiration of the existing rights or warrants without exercise by any of theholders thereof).  In addition, in theevent of any distribution (or deemed distribution) of rights or warrants, orany Trigger Event or other event (of the type described in the precedingsentence) with respect thereto that was counted for purposes of calculating adistribution amount for which an adjustment to the Conversion Price under thisSection 4.6 was made, (1) in the case of any such rights or warrantswhich shall all have been redeemed or repurchased without exercise by anyholders thereof, the Conversion Price shall be readjusted upon such finalredemption or repurchase to give effect to such distribution or Trigger Event,as the case may be, as though it were a cash distribution, equal to the pershare redemption or repurchase price received by a holder or holders of CommonStock with respect to such rights or warrants (assuming such holder hadretained such rights or warrants), made to all holders of Common Stock as ofthe date of such redemption or repurchase, and (2) in the case of suchrights or warrants which shall have expired or been terminated without exerciseby any holders thereof, the Conversion Price shall be readjusted as if suchrights and warrants had not been issued.

###  

### (d)         (1) In case the Companyshall, by dividend or otherwise, at any time distribute (a “TriggeringDistribution”) to all or substantially all holders of its Common Stock cash inan aggregate amount that, together with the aggregate amount of (A) anycash and the fair market value (as determined by the Board of Directors, whosedetermination shall be conclusive evidence thereof and which shall be evidencedby an Officers’ Certificate delivered to the Trustee) of any otherconsideration payable in respect of any tender offer by the Company or aSubsidiary of the Company for Common Stock consummated within the12 months preceding the date of payment of the Triggering Distribution andin respect of which no Conversion Price adjustment pursuant to this Section 4.6has been made and (B) all other cash distributions to all or substantiallyall holders of its Common Stock made within the 12 months preceding the date ofpayment of the Triggering Distribution and in respect of which no ConversionPrice adjustment pursuant to this Section 4.6 has been made, exceeds anamount equal to 10.0% of the product of the Current Market Price per share ofCommon Stock (as determined in accordance with subsection (e) of thisSection 4.6) on the Business

 

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### Day (the “DeterminationDate”) immediately preceding the day on which such Triggering Distribution isdeclared by the Company multiplied by the number of shares of Common Stockoutstanding on the Determination Date (excluding shares held in the treasury ofthe Company), the Conversion Price shall be reduced so that the same shallequal the price determined by multiplying such Conversion Price in effectimmediately prior to the Determination Date by a fraction of which thenumerator shall be the Current Market Price per share of the Common Stock (asdetermined in accordance with subsection (d) of this Section 4.6) onthe Determination Date less the sum of the aggregate amount of cash and theaggregate fair market value (determined as aforesaid in this Section 4.6(d)(1))of any such other consideration so distributed, paid or payable within such 12months (including, without limitation, the Triggering Distribution) applicableto one share of Common Stock (determined on the basis of the number of sharesof Common Stock outstanding on the Determination Date) and the denominatorshall be such Current Market Price per share of the Common Stock (as determinedin accordance with subsection (e) of this Section 4.6) on theDetermination Date, such reduction to become effective immediately prior to theopening of business on the day following the date on which the TriggeringDistribution is paid.

####  

#### (2)          In case any tender offermade by the Company or any of its Subsidiaries for Common Stock shall expire andsuch tender offer (as amended upon the expiration thereof) shall involve thepayment of aggregate consideration in an amount (determined as the sum of theaggregate amount of cash consideration and the aggregate fair market value (asdetermined by the Board of Directors, whose determination shall be conclusiveevidence thereof and which shall be evidenced by an Officers’ Certificatedelivered to the Trustee thereof) of any other consideration) that, togetherwith the aggregate amount of (A) any cash and the fair market value (asdetermined by the Board of Directors, whose determination shall be conclusiveevidence thereof and which shall be evidenced by an Officers’ Certificatedelivered to the Trustee) of any other consideration payable in respect of anyother tender offers by the Company or any Subsidiary of the Company for CommonStock consummated within the 12 months preceding the date of the ExpirationDate (as defined below) and in respect of which no Conversion Price adjustmentpursuant to this Section 4.6 has been made and (B) all cashdistributions to all or substantially all holders of its Common Stock madewithin the 12 months preceding the Expiration Date and in respect of which noConversion Price adjustment pursuant to this Section 4.6 has been made,exceeds an amount equal to 10.0% of the product of the Current Market Price pershare of Common Stock (as determined in accordance with subsection (e) ofthis Section 4.6) as of the last date (the “Expiration Date”) tenderscould have been made pursuant to such tender offer (as it may be amended) (thelast time at which such tenders could have been made on the Expiration Date ishereinafter sometimes called the “Expiration Time”) multiplied by the number ofshares of Common Stock outstanding (including tendered shares but excluding anyshares held in the treasury of the Company) at the Expiration Time, then,immediately prior to the opening of business on the day after the ExpirationDate, the Conversion Price shall be reduced so that the same shall equal theprice determined by multiplying the Conversion Price in effect immediatelyprior to the close of business on the Expiration Date by a fraction of whichthe numerator shall be the product of the number of shares of Common Stockoutstanding (including tendered shares but excluding any shares held in thetreasury of the Company) at the Expiration Time multiplied by the CurrentMarket Price per share of the Common Stock (as determined in accordance withsubsection (e) of this Section 4.6) on the Trading Day nextsucceeding the Expiration Date and the denominator shall be the sum of(x) the aggregate consideration (determined as aforesaid) payable tostockholders based on the acceptance (up to any maximum specified in the termsof the tender offer) of all shares validly tendered and not withdrawn as of theExpiration Time (the shares deemed so accepted, up to any such maximum, beingreferred to as the “Purchased Shares”) and (y) the product of the numberof shares of Common Stock outstanding (less any Purchased Shares and excludingany shares held in the treasury of the Company) at the Expiration Time and theCurrent Market Price per share of Common Stock (as determined in accordancewith subsection (e) of this Section 4.6) on the Trading Day nextsucceeding the Expiration Date,

 

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such reduction to becomeeffective immediately prior to the opening of business on the day following theExpiration Date.  In the event that theCompany is obligated to purchase shares pursuant to any such tender offer, butthe Company is permanently prevented by applicable law from effecting any orall such purchases or any or all such purchases are rescinded, the ConversionPrice shall again be adjusted to be the Conversion Price which would have beenin effect based upon the number of shares actually purchased.  If the application of thisSection 4.6(d)(2) to any tender offer would result in an increase in theConversion Price, no adjustment shall be made for such tender offer under thisSection 4.6(d)(2).

 

#### (3)          For purposes of thisSection 4.6(d), the term “tender offer” shall mean and include both tenderoffers and exchange offers, all references to “purchases” of shares in tenderoffers (and all similar references) shall mean and include both the purchase ofshares in tender offers and the acquisition of shares pursuant to exchangeoffers, and all references to “tendered shares” (and all similar references)shall mean and include shares tendered in both tender offers and exchangeoffers.

 

### (e)          For the purpose of anycomputation under subsections (b), (c) and (d) of this Section 4.6,the current market price (the “Current Market Price”) per share of Common Stockon any date shall be deemed to be the average of the daily closing prices forthe 30 consecutive Trading Days commencing 45 Trading Days before (i) theDetermination Date or the Expiration Date, as the case may be, with respect todistributions or tender offers under subsection (c) or (d) of thisSection 4.6 or (ii) the record date with respect to distributions,issuances or other events requiring such computation under subsection (b),(c) or (d) of this Section 4.6. The closing price (the “Closing Price”) for each day shall be the lastreported sales price or, in case no such reported sale takes place on suchdate, the average of the reported closing bid and asked prices in either caseon the Nasdaq National Market (the “NNM”) or, if the Common Stock is not listedor admitted to trading on the NNM, on the principal national securitiesexchange on which the Common Stock is listed or admitted to trading or, if notlisted or admitted to trading on the NNM or any national securities exchange,the last reported sales price of the Common Stock as quoted on NASDAQ or, incase no reported sales takes place, the average of the closing bid and askedprices as quoted on NASDAQ or any comparable system or, if the Common Stock isnot quoted on NASDAQ or any comparable system, the closing sales price or, incase no reported sale takes place, the average of the closing bid and askedprices, as furnished by any two members of the National Association ofSecurities Dealers, Inc. selected from time to time by the Company for thatpurpose.  If no such prices areavailable, the Current Market Price per share shall be the fair value of ashare of Common Stock as determined in good faith by the Board of Directors(which shall be evidenced by an Officers’ Certificate delivered to theTrustee).

 

### (f)            In any case in whichthis Section 4.6 shall require that an adjustment be made following arecord date or a Determination Date or Expiration Date, as the case may be,established for purposes of this Section 4.6, the Company may elect todefer (but only until five Business Days following the filing by the Companywith the Trustee of the certificate described in Section 4.9) issuing tothe Holder of any Security converted after such record date or DeterminationDate or Expiration Date the shares of Common Stock and other capital stock ofthe Company issuable upon such conversion over and above the shares of CommonStock and other capital stock of the Company issuable upon such conversion onlyon the basis of the Conversion Price prior to adjustment; and, in lieu of theshares the issuance of which is so deferred, the Company shall issue or causeits transfer agents to issue due bills or other appropriate evidence preparedby the Company of the right to receive such shares.  If any distribution in respect of which an adjustment to theConversion Price is required to be made as of the record date or DeterminationDate or Expiration Date therefor is not thereafter made or paid by the Companyfor any reason, the Conversion Price shall be readjusted to the ConversionPrice which would then be in effect if such record date had not been fixed orsuch effective date or Determination Date or Expiration Date had not occurred.

 

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**SECTION 4.7.   NO ADJUSTMENT.**

 

No adjustment in theConversion Price shall be required unless the adjustment would require anincrease or decrease of at least 1% in the Conversion Price as last adjusted; provided,however, that any adjustments which by reason of this Section 4.7 arenot required to be made shall be carried forward and taken into account in anysubsequent adjustment.  All calculationsunder this Article 4 shall be made to the nearest cent or to the nearestone-hundredth of a share, as the case may be.

 

No adjustment need bemade for issuances of Common Stock pursuant to a Company plan for reinvestmentof dividends or interest or for a change in the par value or a change to no parvalue of the Common Stock.

 

To the extent that theSecurities become convertible into the right to receive cash, no adjustmentneed be made thereafter as to the cash. Interest will not accrue on the cash.

 

**SECTION4.8.   ADJUSTMENT FOR TAX PURPOSES.**

 

The Company shall beentitled to make such reductions in the Conversion Price, in addition to thoserequired by Section 4.6, as it in its discretion shall determine to beadvisable in order that any stock dividends, subdivisions of shares,distributions of rights to purchase stock or securities or distributions ofsecurities convertible into or exchangeable for stock hereafter made by theCompany to its stockholders shall not be taxable.

 

**SECTION4.9.   NOTICE OF ADJUSTMENT.**

 

Whenever the ConversionPrice is adjusted, the Company shall promptly mail to Securityholders a noticeof the adjustment and file with the Trustee an Officers’ Certificate brieflystating the facts requiring the adjustment and the manner of computing it.  Unless and until the Trustee shall receivean Officers’ Certificate setting forth an adjustment of the Conversion Price,the Trustee may assume without inquiry that the Conversion Price has not beenadjusted and that the last Conversion Price of which it has knowledge remainsin effect.

 

**SECTION4.10.   NOTICE OF CERTAIN TRANSACTIONS.**

 

In the event that:

####  

#### (1)          the Company takes anyaction which would require an adjustment in the Conversion Price;

####  

#### (2)          the Company consolidatesor merges with, or transfers all or substantially all of its property andassets to, another corporation and shareholders of the Company must approve thetransaction; or

####  

#### (3)          there is a dissolutionor liquidation of the Company,

####  

the Company shall mail toHolders and file with the Trustee a notice stating the proposed record oreffective date, as the case may be.  TheCompany shall mail the notice at least ten days before such date.  Failure to mail such notice or any defect thereinshall not affect the validity of any transaction referred to inclause (1), (2) or (3) of this Section 4.10.

 

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**SECTION4.11.  ****EFFECT OFRECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE.**

 

If any of the followingshall occur, namely:  (a) anyreclassification or change of shares of Common Stock issuable upon conversionof the Securities (other than a change in par value, or from par value to no parvalue, or from no par value to par value, or as a result of a subdivision orcombination, or any other change for which an adjustment is provided inSection 4.6); (b) any consolidation or merger or combination to whichthe Company is a party other than a merger in which the Company is thecontinuing corporation and which does not result in any reclassification of, orchange (other than in par value, or from par value to no par value, or from nopar value to par value, or as a result of a subdivision or combination) in,outstanding shares of Common Stock; or (c) any sale or conveyance as anentirety or substantially as an entirety of the property and assets of theCompany, directly or indirectly, to any person, then the Company, or suchsuccessor, purchasing or transferee corporation, as the case may be, shall, asa condition precedent to such reclassification, change, combination,consolidation, merger, sale or conveyance, execute and deliver to the Trustee asupplemental indenture providing that the Holder of each Security then outstandingshall have the right to convert such Security into the kind and amount ofshares of stock and other securities and property (including cash) receivableupon such reclassification, change, combination, consolidation, merger, sale orconveyance by a holder of the number of shares of Common Stock deliverable uponconversion of such Security immediately prior to such reclassification, change,combination, consolidation, merger, sale or conveyance.  Such supplemental indenture shall providefor adjustments of the Conversion Price which shall be as nearly equivalent asmay be practicable to the adjustments of the Conversion Price provided for inthis Article 4.  If, in the case ofany such consolidation, merger, combination, sale or conveyance, the stock or othersecurities and property (including cash) receivable thereupon by a holder ofCommon Stock include shares of stock or other securities and property of aperson other than the successor, purchasing or transferee corporation, as thecase may be, in such consolidation, merger, combination, sale or conveyance,then such supplemental indenture shall also be executed by such other personand shall contain such additional provisions to protect the interests of theHolders of the Securities as the Board of Directors shall reasonably considernecessary by reason of the foregoing. The provisions of this Section 4.11 shall similarly apply tosuccessive reclassifications, changes, combinations, consolidations, mergers, salesor conveyances.

 

In the event the Companyshall execute a supplemental indenture pursuant to this Section 4.11, theCompany shall promptly file with the Trustee (x) an Officers’ Certificatebriefly stating the reasons therefor, the kind or amount of shares of stock orother securities or property (including cash) receivable by Holders of theSecurities upon the conversion of their Securities after any suchreclassification, change, combination, consolidation, merger, sale orconveyance, any adjustment to be made with respect thereto and that all conditionsprecedent have been complied with and (y) an Opinion of Counsel that allconditions precedent have been complied with, and shall promptly mail noticethereof to all Holders.

 

**SECTION4.12.   TRUSTEE’S DISCLAIMER.**

 

The Trustee shall have noduty to determine when an adjustment under this Article 4 should be made,how it should be made or what such adjustment should be, but may accept asconclusive evidence of that fact or the correctness of any such adjustment, andshall be protected in relying upon, an Officers’ Certificate including theOfficers’ Certificate with respect thereto which the Company is obligated tofile with the Trustee pursuant to Section 4.9.  The Trustee makes no representation as to the validity or valueof any securities or assets issued upon conversion of Securities, and theTrustee shall not be responsible for the Company’s failure to comply with anyprovisions of this Article 4.

 

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The Trustee shall not beunder any responsibility to determine the correctness of any provisionscontained in any supplemental indenture executed pursuant to Section 4.11,but may accept as conclusive evidence of the correctness thereof, and shall befully protected in relying upon, the Officers’ Certificate with respect theretowhich the Company is obligated to file with the Trustee pursuant toSection 4.11.

 

**SECTION4.13.   VOLUNTARY REDUCTION.**

 

The Company from time totime may reduce the Conversion Price by any amount for any period of time if theperiod is at least 20 days and if the reduction is irrevocable during theperiod if our Board of Directors determines that such reduction would be in thebest interest of the Company or to avoid or diminish income tax to holders ofshares of our Common Stock in connection with a dividend or distribution ofstock or similar event, and the Company provides 15 days prior notice of anyreduction in the Conversion Price; provided, however, that in noevent may the Company reduce the Conversion Price to be less than the par valueof a share of Common Stock.

 

# **ARTICLE 5SUBORDINATION**

 

**SECTION5.1.   AGREEMENT OF SUBORDINATION.**

 

The Company covenants andagrees, and each Holder of Securities issued hereunder by its acceptancethereof likewise covenants and agrees, that all Securities shall be issuedsubject to the provisions of this Article 5; and each Person holding anySecurity, whether upon original issue or upon transfer, assignment or exchangethereof, accepts and agrees to be bound by such provisions.

 

The payment of theprincipal of, premium, if any, and interest (including Additional Interest, ifany) on all Securities (including, but not limited to, the Change in ControlPurchase Price with respect to the Securities subject to purchase in accordancewith Article 3 as provided in this Indenture) issued hereunder shall, tothe extent and in the manner hereinafter set forth, be subordinated and subjectin right of payment to the prior payment in full in cash or paymentsatisfactory to the holders of Senior Indebtedness of all Senior Indebtedness,whether outstanding at the date of this Indenture or thereafter incurred.

 

No provision of thisArticle 5 shall prevent the occurrence of any default or Event of Defaulthereunder.

 

**SECTION5.2.   PAYMENTS TO HOLDERS.**

 

No payment shall be madewith respect to the principal of, or premium, if any, or interest (includingAdditional Interest, if any) on the Securities (including, but not limited to,the Change in Control Purchase Price with respect to the Securities subject topurchase in accordance with Article 3 as provided in this Indenture), exceptpayments and distributions made by the Trustee as permitted by the first orsecond paragraph of Section 5.5, if:

 

(i)                                     adefault in the payment of principal, premium, interest, rent or otherobligations due on any Designated Senior Indebtedness occurs and is continuing(or, in the case of Designated Senior Indebtedness for which there is a periodof grace, in the event of such a default that continues beyond the period ofgrace, if any, specified in the instrument or lease evidencing such DesignatedSenior Indebtedness), unless and until such default shall have been cured orwaived or shall have ceased to exist; or

 

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(ii)                                  adefault, other than a payment default, on a Designated Senior Indebtednessoccurs and is continuing that then permits holders of such Designated SeniorIndebtedness to accelerate its maturity and the Trustee receives a notice ofthe default (a “Payment Blockage Notice”) from a Representative or holder ofDesignated Senior Indebtedness or the Company.

 

Subject to the provisionsof Section 5.5, if the Trustee receives any Payment Blockage Notice pursuant toclause (ii) above, no subsequent Payment Blockage Notice shall beeffective for purposes of this Section unless and until at least 365consecutive days shall have elapsed since the effectiveness of the immediatelyprior Payment Blockage Notice and all scheduled payments on the Securities thathave come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date ofdelivery of any Payment Blockage Notice to the Trustee (unless such default waswaived, cured or otherwise ceased to exist and thereafter subsequentlyreoccurred) shall be, or be made, the basis for a subsequent Payment BlockageNotice.

 

The Company may and shallresume payments on and distributions in respect of the Securities:

###  

### (a)          in the case of a defaultreferred to in clause (i) above, upon the date upon which the default iscured or waived or ceases to exist, or

###  

### (b)         in the case of a defaultreferred to in clause (ii) above, upon the earlier of (1) the date onwhich such default is cured or waived or ceases to exist or (2) 179 days afterthe date on which the applicable Payment Blockage Notice is received, if thematurity of such Designated Senior Indebtedness has not been accelerated,unless this Article 5 otherwise prohibits the payment or distribution at thetime of such payment or distribution.

 

Upon any payment by theCompany, or distribution of assets of the Company of any kind or character,whether in cash, property or securities, to creditors upon any dissolution orwinding-up or liquidation or reorganization of the Company (whether voluntaryor involuntary) or in bankruptcy, insolvency, receivership or similarproceedings, all amounts due or to become due upon all Senior Indebtednessshall first be paid in full in cash, or other payments satisfactory to theholders of Senior Indebtedness before any payment is made on account of theprincipal of, premium, if any, or interest (including Additional Interest, ifany) on the Securities (except payments made pursuant to Article 10 from moniesdeposited with the Trustee pursuant thereto prior to commencement ofproceedings for such dissolution, winding-up, liquidation or reorganization);and upon any such dissolution or winding-up or liquidation or reorganization ofthe Company or bankruptcy, insolvency, receivership or other proceeding, anypayment by the Company, or distribution of assets of the Company of any kind orcharacter, whether in cash, property or securities, to which the Holders of theSecurities or the Trustee would be entitled, except for the provision of thisArticle 5, shall (except as aforesaid) be paid by the Company or by anyreceiver, trustee in bankruptcy, liquidating trustee, agent or other Personmaking such payment or distribution, or by the Holders of the Securities or bythe Trustee under this Indenture if received by them or it, directly to theholders of Senior Indebtedness (pro rata to such holders on the basis of therespective amounts of Senior Indebtedness held by such holders, or as otherwiserequired by law or a court order) or their representative or representatives,or to the trustee or trustees under any indenture pursuant to which anyinstruments evidencing any Senior Indebtedness may have been issued, as theirrespective interests may appear, to the extent necessary to pay all SeniorIndebtedness in full in cash, or other payment satisfactory to the holders ofSenior Indebtedness, after giving effect to any concurrent payment ordistribution to or for the holders of Senior Indebtedness, before any paymentor distribution is made to the Holders of the Securities or to the Trustee.

 

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For purposes of thisArticle 5, the words, “cash, property or securities” shall not be deemed toinclude shares of stock of the Company as reorganized or readjusted, orsecurities of the Company or any other corporation provided for by a plan ofreorganization or readjustment, the payment of which is subordinated at leastto the extent provided in this Article 5 with respect to the Securities to thepayment of all Senior Indebtedness which may at the time be outstanding; providedthat (i) the Senior Indebtedness is assumed by the new corporation,if any, resulting from any reorganization or readjustment, and (ii) therights of the holders of Senior Indebtedness (other than leases which are notassumed by the Company or the new corporation, as the case may be) are not,without the consent of such holders, altered by such reorganization orreadjustment. The consolidation of the Company with, or the merger of theCompany into, another corporation or the liquidation or dissolution of theCompany following the conveyance, transfer or lease of its property as anentirety, or substantially as an entirety, to another corporation upon theterms and conditions provided for in Article 7 shall not be deemed a dissolution,winding-up, liquidation or reorganization for the purposes of thisSection 5.2 if such other corporation shall, as a part of suchconsolidation, merger, conveyance, transfer or lease, comply with theconditions stated in Article 7.

 

In the event of theacceleration of the Securities because of an Event of Default, no payment ordistribution shall be made to the Trustee or any Holder of Securities inrespect of the principal of, premium, if any, or interest (including AdditionalInterest, if any) on the Securities by the Company (including, but not limitedto, the Change in Control Purchase Price with respect to the Securities subjectto purchase in accordance with Article 3 as provided in this Indenture), exceptpayments and distributions made by the Trustee as permitted by Section 5.5,until all Senior Indebtedness has been paid in full in cash or other paymentsatisfactory to the holders of Senior Indebtedness or such acceleration isrescinded in accordance with the terms of this Indenture. If payment of theSecurities is accelerated because of an Event of Default, the Company shallpromptly notify holders of Senior Indebtedness of such acceleration.

 

In the event that,notwithstanding the foregoing provisions, any payment or distribution of assetsof the Company of any kind or character, whether in cash, property orsecurities (including, without limitation, by way of setoff or otherwise),prohibited by the foregoing, shall be received by the Trustee or the Holders ofthe Securities before all Senior Indebtedness is paid in full, in cash or otherpayment satisfactory to the holders of Senior Indebtedness, or provision ismade for such payment thereof in accordance with its terms in cash or otherpayment satisfactory to the holders of Senior Indebtedness, such payment ordistribution shall be held in trust for the benefit of and shall be paid overor delivered to the holders of Senior Indebtedness or their representative orrepresentatives, or to the trustee or trustees under any indenture pursuant towhich any instruments evidencing any Senior Indebtedness may have been issued,as their respective interests may appear, as calculated by the Company, forapplication to the payment of all Senior Indebtedness remaining unpaid to theextent necessary to pay all Senior Indebtedness in full, in cash or otherpayment satisfactory to the holders of Senior Indebtedness, after giving effectto any concurrent payment or distribution to or for the holders of such SeniorIndebtedness.

 

Nothing in this Section5.2 shall apply to claims of, or payments to, the Trustee under or pursuant toSection 9.7.  This Section 5.2 shall besubject to the further provisions of Section 5.5.

 

**SECTION5.3.   SUBROGATION OF SECURITIES.**

 

Subject to the payment infull, in cash or other payment satisfactory to the holders of SeniorIndebtedness, of all Senior Indebtedness, the rights of the Holders of theSecurities shall be subrogated to the extent of the payments or distributionsmade to the holders of such Senior Indebtedness pursuant to the provisions ofthis Article 5 (equally and ratably with the holders of all indebtedness of theCompany which by

 

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its express terms issubordinated to other indebtedness of the Company to substantially the sameextent as the Securities are subordinated and is entitled to like rights ofsubrogation) to the rights of the holders of Senior Indebtedness to receivepayments or distributions of cash, property or securities of the Companyapplicable to the Senior Indebtedness until the principal, premium, if any, andinterest (including Additional Interest, if any) on the Securities shall bepaid in full in cash or other payment satisfactory to the holders of SeniorIndebtedness; and, for the purposes of such subrogation, no payments ordistributions to the holders of the Senior Indebtedness of any cash, propertyor securities to which the Holders of the Securities or the Trustee would beentitled except for the provisions of this Article 5, and no payment overpursuant to the provisions of this Article 5, to or for the benefit of theholders of Senior Indebtedness by Holders of the Securities or the Trustee,shall, as between the Company, its creditors other than holders of SeniorIndebtedness, and the Holders of the Securities, be deemed to be a payment bythe Company to or on account of the Senior Indebtedness; and no payments ordistributions of cash, property or securities to or for the benefit of theHolders of the Securities pursuant to the subrogation provisions of thisArticle 5, which would otherwise have been paid to the holders of SeniorIndebtedness shall be deemed to be a payment by the Company to or for theaccount of the Securities. It is understood that the provisions of this Article5 are and are intended solely for the purposes of defining the relative rightsof the Holders of the Securities, on the one hand, and the holders of theSenior Indebtedness, on the other hand.

 

Nothing contained in thisArticle 5 or elsewhere in this Indenture or in the Securities is intended to orshall impair, as among the Company, its creditors other than the holders ofSenior Indebtedness, and the Holders of the Securities, the obligation of theCompany, which is absolute and unconditional, to pay to the Holders of theSecurities the principal of (and premium, if any) and interest on theSecurities as and when the same shall become due and payable in accordance withtheir terms, or is intended to or shall affect the relative rights of theHolders of the Securities and creditors of the Company other than the holdersof the Senior Indebtedness, nor shall anything herein or therein prevent theTrustee or the Holder of any Security from exercising all remedies otherwisepermitted by applicable law upon default under this Indenture, subject to therights, if any, under this Article 5 of the holders of Senior Indebtedness inrespect of cash, property or securities of the Company received upon theexercise of any such remedy.

 

Upon any payment ordistribution of assets of the Company referred to in this Article 5, theTrustee, subject to the provisions of Section 9.1, and the Holders of theSecurities shall be entitled to rely upon any order or decree made by any courtof competent jurisdiction in which such bankruptcy, dissolution, winding-up,liquidation or reorganization proceedings are pending, or a certificate of thereceiver, trustee in bankruptcy, liquidating trustee, agent or other personmaking such payment or distribution, delivered to the Trustee or to the Holdersof the Securities, for the purpose of ascertaining the persons entitled toparticipate in such distribution, the holders of the Senior Indebtedness andother indebtedness of the Company, the amount thereof or payable thereon andall other facts pertinent thereto or to this Article 5.

 

**SECTION5.4.   AUTHORIZATION TO EFFECTSUBORDINATION.**

 

Each Holder of aSecurity by the Holder’s acceptance thereof authorizes and directs the Trusteeon the Holder’s behalf to take such action as may be necessary or appropriateto effectuate the subordination as provided in this Article 5 and appoints theTrustee to act as the Holder’s attorney-in-fact for any and all such purposes.If the Trustee does not file a proper proof of claim or proof of debt in theform required in any proceeding referred to in Section 5.3 hereof at least 30days before the expiration of the time to file such claim, the holders of anySenior Indebtedness or their representatives are hereby authorized to file anappropriate claim for and on behalf of the Holders of the Securities.

 

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**SECTION 5.5.   NOTICE TO TRUSTEE.**

 

The Company shall giveprompt written notice in the form of an Officers’ Certificate to a TrustOfficer of the Trustee and to any Paying Agent of any fact known to the Companywhich would prohibit the making of any payment of monies to or by the Trusteeor any Paying Agent in respect of the Securities pursuant to the provisions ofthis Article 5. Notwithstanding the provisions of this Article 5 or any otherprovision of this Indenture, the Trustee shall not be charged with knowledge ofthe existence of any facts which would prohibit the making of any payment ofmonies to or by the Trustee in respect of the Securities pursuant to theprovisions of this Article 5, unless and until a Trust Officer of the Trusteeshall have received written notice thereof at the Corporate Trust Office fromthe Company (in the form of an Officers’ Certificate) or a Representative or aHolder or Holders of Senior Indebtedness or from any trustee thereof; andbefore the receipt of any such written notice, the Trustee, subject to theprovisions of Section 9.1, shall be entitled in all respects to assume that nosuch facts exist; providedthat if on a date not less than oneBusiness Day prior to the date upon which by the terms hereof any such moniesmay become payable for any purpose (including, without limitation, the paymentof the principal of, or premium, if any, or interest on any Security) theTrustee shall not have received, with respect to such monies, the noticeprovided for in this Section 5.5, then, anything herein contained to thecontrary notwithstanding, the Trustee shall have full power and authority toreceive such monies and to apply the same to the purpose for which they werereceived, and shall not be affected by any notice to the contrary which may bereceived by it on or after such prior date. Notwithstanding anything in thisArticle 5 to the contrary, nothing shall prevent any payment by the Trustee tothe Holders of monies deposited with it pursuant to Article 10, and any suchpayment shall not be subject to the provisions of Article 5.

 

The Trustee, subject tothe provisions of Section 9.1, shall be entitled to rely on the delivery to itof a written notice by a Representative or a person representing himself to bea holder of Senior Indebtedness (or a trustee on behalf of such holder) toestablish that such notice has been given by a Representative or a holder ofSenior Indebtedness or a trustee on behalf of any such holder or holders. Inthe event that the Trustee determines in good faith that further evidence isrequired with respect to the right of any person as a holder of SeniorIndebtedness to participate in any payment or distribution pursuant to thisArticle 5, the Trustee may request such Person to furnish evidence to thereasonable satisfaction of the Trustee as to the amount of Senior Indebtednessheld by such Person, the extent to which such Person is entitled to participatein such payment or distribution and any other facts pertinent to the rights ofsuch Person under this Article 5, and if such evidence is not furnished theTrustee may defer any payment to such Person pending judicial determination asto the right of such Person to receive such payment.

 

**SECTION5.6.   TRUSTEE’S RELATION TO SENIORINDEBTEDNESS.**

 

The Trustee in itsindividual capacity shall be entitled to all the rights set forth in thisArticle 5 in respect of any Senior Indebtedness at any time held by it, to thesame extent as any other holder of Senior Indebtedness, and nothing in Section9.11 or elsewhere in this Indenture shall deprive the Trustee of any of itsrights as such holder.

 

With respect to theholders of Senior Indebtedness, the Trustee undertakes to perform or to observeonly such of its covenants and obligations as are specifically set forth inthis Article 5, and no implied covenants or obligations with respect to theholders of Senior Indebtedness shall be read into this Indenture against theTrustee. The Trustee shall not be deemed to owe any fiduciary duty to theholders of Senior Indebtedness and, subject to the provisions of Section 9.1,the Trustee shall not be liable to any holder of Senior Indebtedness if itshall pay over or deliver to Holders of Securities, the Company or any otherperson

 

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money or assets to whichany holder of Senior Indebtedness shall be entitled by virtue of this Article 5or otherwise.

 

**SECTION5.7.   NO IMPAIRMENT OF SUBORDINATION.**

 

No right of any presentor future holder of any Senior Indebtedness to enforce subordination as hereinprovided shall at any time in any way be prejudiced or impaired by any act orfailure to act on the part of the Company or by any act or failure to act, ingood faith, by any such holder, or by any noncompliance by the Company with theterms, provisions and covenants of this Indenture, regardless of any knowledgethereof which any such holder may have or otherwise be charged with.

 

**SECTION5.8.   CERTAIN CONVERSIONS DEEMEDPAYMENT.**

 

For the purposes of thisArticle 5 only, (1) the issuance and delivery of junior securitiesupon conversion of Securities in accordance with Article 4 shall not be deemedto constitute a payment or distribution on account of the principal of (orpremium, if any) or interest on Securities or on account of the purchase orother acquisition of Securities, and (2) the payment, issuance or deliveryof cash (except in satisfaction of fractional shares pursuant to Section 4.3),property or securities (other than junior securities) upon conversion of aSecurity shall be deemed to constitute payment on account of the principal ofsuch Security. For the purposes of this Section 5.8, the term “juniorsecurities” means (a) shares of any stock of any class of the Company, or(b) securities of the Company which are subordinated in right of paymentto all Senior Indebtedness which may be outstanding at the time of issuance ordelivery of such securities to substantially the same extent as, or to agreater extent than, the Securities are so subordinated as provided in thisArticle. Nothing contained in this Article 5 or elsewhere in this Indenture orin the Securities is intended to or shall impair, as among the Company, itscreditors other than holders of Senior Indebtedness and the Holders, the right,which is absolute and unconditional, of the Holder of any Security to convertsuch Security in accordance with Article 4.

 

**SECTION5.9.   ARTICLE APPLICABLE TO PAYINGAGENTS.**

 

If at any time any PayingAgent other than the Trustee shall have been appointed by the Company and bethen acting hereunder, the term “Trustee” as used in this Article shall (unlessthe context otherwise requires) be construed as extending to and including suchPaying Agent within its meaning as fully for all intents and purposes as ifsuch Paying Agent were named in this Article in addition to or in place of theTrustee; provided, however, that the first paragraph of Section5.5 shall not apply to the Company or any Affiliate of the Company if it orsuch Affiliate acts as Paying Agent.

 

**SECTION5.10.   SENIOR INDEBTEDNESS ENTITLED TORELY.**

 

The holders of SeniorIndebtedness (including, without limitation, Designated Senior Indebtedness)shall have the right to rely upon this Article 5, and no amendment ormodification of the provisions contained herein shall diminish the rights ofsuch holders unless such holders shall have agreed in writing thereto.

 

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**ARTICLE 6COVENANTS**

 

**SECTION6.1.   PAYMENT OF SECURITIES.**

 

The Company shallpromptly make all payments in respect of the Securities on the dates and in themanner provided in the Securities and this Indenture.  An installment of principal or interest or Additional Interest,if any, shall be considered paid on the date it is due if the Paying Agent(other than the Company) holds by 11:00 a.m., New York City time, on that datemoney, deposited by the Company or an Affiliate thereof, sufficient to pay theinstallment.  The Company shall, (inimmediately available funds) to the fullest extent permitted by law, payinterest on overdue principal (including premium, if any) and overdueinstallments of interest at the rate borne by the Securities per annum.

 

Payment of the principalof (and premium, if any) and any interest on the Securities shall be made atthe office or agency of the Company maintained for that purpose in the Boroughof Manhattan, The City of New York (which shall initially be the office at 100Wall Street, Suite 1600, New York, New York 10005 of the Trustee or at theCorporate Trust Office of the Trustee in such coin or currency of the UnitedStates of America as at the time of payment is legal tender for payment ofpublic and private debts; provided, however, that at the optionof the Company payment of interest may be made by check mailed to the addressof the Person entitled thereto as such address appears in the Register; providedfurther that a Holder with an aggregate principal amount in excess of$2,000,000 will be paid by wire transfer in immediately available funds at theelection of such Holder if such Holder has provided wire transfer instructionsto the Company at least 10 Business Days prior to the payment date.

 

**SECTION 6.2.   SEC REPORTS.**

 

The Company shall fileall reports and other information and documents which it is required to filewith the SEC pursuant to Section 13 or 15(d) of the Exchange Act, andwithin 15 days after it files them with the SEC, the Company shall file copiesof all such reports, information and other documents with the Trustee.

 

Delivery of such reports,information and documents to the Trustee is for informational purposes only andthe Trustee’s receipt of such shall not constitute constructive notice of anyinformation contained therein or determinable from information containedtherein, including the Company’s compliance with any of its covenants hereunder(as to which the Trustee is entitled to rely exclusively on Officers’Certificates).

 

**SECTION6.3.   COMPLIANCE CERTIFICATES.**

 

The Company shall deliverto the Trustee, within 90 days after the end of each fiscal year of the Company(beginning with the fiscal year ending December 31, 2003), an Officers’Certificate stating as to the best of the signer’s knowledge whether or not theCompany is in compliance with all conditions and covenants on its partcontained in this Indenture and stating whether or not, to the best of thesigner’s knowledge, there has been any default or Event of Default and, if so,the Officers’ Certificate shall describe the default or Event of Default andthe efforts to remedy the same.  For thepurposes of this Section 6.3, compliance shall be determined withoutregard to any grace period or requirement of notice provided pursuant to theterms of this Indenture.

 

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**SECTION6.4.   FURTHER INSTRUMENTS AND ACTS.**

 

Upon request of theTrustee, the Company will execute and deliver such further instruments and dosuch further acts as may be reasonably necessary or proper to carry out moreeffectively the purposes of this Indenture.

 

**SECTION6.5.   MAINTENANCE OF CORPORATEEXISTENCE.**

 

Subject toArticle 7, the Company will do or cause to be done all things necessary topreserve and keep in full force and effect its corporate existence.

 

**SECTION6.6.   RULE 144A INFORMATIONREQUIREMENT.**

 

Within the period priorto the expiration of the holding period applicable to sales thereof underRule 144(k) under the Securities Act (or any successor provision), theCompany covenants and agrees that it shall, during any period in which it isnot subject to Section 13 or 15(d) under the Exchange Act, upon therequest of any Holder or beneficial holder of the Securities make available tosuch Holder or beneficial holder of Securities or any Common Stock issued uponconversion thereof which continue to be Restricted Securities in connectionwith any sale thereof and any prospective purchaser of Securities or suchCommon Stock designated by such Holder or beneficial holder, the informationrequired pursuant to Rule 144A(d)(4) under the Securities Act and it willtake such further action as any Holder or beneficial holder of such Securitiesor such Common Stock may reasonably request, all to the extent required fromtime to time to enable such Holder or beneficial holder to sell its Securitiesor Common Stock without registration under the Securities Act within thelimitation of the exemption provided by Rule 144A, as such Rule may beamended from time to time.  Upon therequest of any Holder or any beneficial holder of the Securities or such CommonStock, the Company will deliver to such Holder a written statement as towhether it has complied with such requirements.

 

**SECTION 6.7.****   STAY,EXTENSION AND USURY LAWS.**

 

The Company covenants (tothe extent that it may lawfully do so) that it shall not at any time insistupon, plead, or in any manner whatsoever claim or take the benefit or advantageof, any stay, extension or usury law or other law which would prohibit orforgive the Company from paying all or any portion of the principal of,premium, if any, or interest (including Additional Interest, if any) on theSecurities as contemplated herein, wherever enacted, now or at any timehereafter in force, or which may affect the covenants or the performance ofthis Indenture, and the Company (to the extent it may lawfully do so) herebyexpressly waives all benefit or advantage of any such law and covenants that itwill not, by resort to any such law, hinder, delay or impede the execution of anypower herein granted to the Trustee, but will suffer and permit the executionof every such power as though no such law had been enacted.

 

**SECTION6.8.   PAYMENT OF ADDITIONAL INTEREST.**

 

If Additional Interest ispayable by the Company pursuant to the Registration Rights Agreement, theCompany shall deliver to the Trustee a certificate to that effect stating(i) the amount of such Additional Interest that is payable and(ii) the date on which such Additional Interest is payable.  Unless and until a Trust Officer of theTrustee receives such a certificate, the Trustee may assume without inquirythat no such Additional Interest is payable. If the Company has paid Additional Interest directly to the Personsentitled to it, the Company shall deliver to the Trustee a certificate settingforth the particulars of such payment.

 

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# **ARTICLE 7**

# **CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE**

 

**SECTION 7.1.****   COMPANY MAYCONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.**

 

The Company shall notconsolidate with or merge into any other Person (in a transaction in which theCompany is not the surviving corporation) or convey, transfer or lease itsproperties and assets substantially as an entirety to any Person, other than toone or more of its Subsidiaries, unless:

####  

#### (1)          in case the Companyshall consolidate with or merge into another Person or convey, transfer orlease its properties and assets substantially as an entirety to any Person, thePerson formed by such consolidation or into which the Company is merged or thePerson which acquires by conveyance or transfer, or which leases, theproperties and assets of the Company substantially as an entirety shall be acorporation, limited liability company, partnership, trust or other businessentity organized and validly existing under the laws of the United States ofAmerica, any State thereof or the District of Columbia and, if the Company isnot the surviving corporation, shall expressly assume, by an indenturesupplemental hereto, executed and delivered to the Trustee, in formsatisfactory to the Trustee, the due and punctual payment of the principal ofand any premium and interest on all the Securities and the performance orobservance of every covenant of this Indenture on the part of the Company to beperformed or observed and the conversion rights shall be provided for inaccordance with Article 4, by supplemental indenture satisfactory in form tothe Trustee, executed and delivered to the Trustee, by the Person (if other thanthe Company) formed by such consolidation or into which the Company shall havebeen merged or by the Person which shall have acquired the Company’s assets;

####  

#### (2)          immediately after givingeffect to such transaction, no Event of Default or Default, shall have occurredand be continuing; and

####  

#### (3)          the Company hasdelivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,each stating that such consolidation, merger, conveyance, transfer or leaseand, if a supplemental indenture is required in connection with suchtransaction, such supplemental indenture complies with this Article and thatall conditions precedent herein provided for relating to such transaction havebeen complied with.

 

**SECTION7.2.   SUCCESSOR SUBSTITUTED.**

 

Upon any consolidation ofthe Company with, or merger of the Company into, any other Person or anyconveyance, transfer or lease of the properties and assets of the Companysubstantially as an entirety in accordance with Section 7.1, the successorPerson formed by such consolidation or into which the Company is merged or towhich such conveyance, transfer or lease is made shall succeed to, and besubstituted for, and may exercise every right and power of, the Company underthis Indenture with the same effect as if such successor Person had been namedas the Company herein, and thereafter, except in the case of a lease, thepredecessor Person shall be relieved of all obligations and covenants underthis Indenture and the Securities.

 

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# **ARTICLE 8DEFAULT AND REMEDIES**

 

**SECTION 8.1.   EVENTS OF DEFAULT.**

 

An “Event of Default”shall occur if:

####  

#### (1)          the Company defaults inthe payment of any interest or Additional Interest, if any, payable to allholders of Registrable Securities (as defined in the Registration RightsAgreement) on any Security when the same becomes due and payable and thedefault continues for a period of 30 days, whether or not such payment shall beprohibited by the provisions of Article 5 hereof;

####  

#### (2)          the Company defaults inthe payment of any principal of (including, without limitation, any premium, ifany, on) any Security when the same becomes due and payable (whether atmaturity, on a Change of Control Purchase Date or otherwise), whether or notsuch payment shall be prohibited by the provisions of Article 5 hereof;

####  

#### (3)          the Company fails tocomply with any of its other agreements contained in the Securities or thisIndenture and the default continues for the period and after the noticespecified below;

####  

#### (4)          the Company fails toprovide a Change in Control Purchase Notice when required by Section 3.2; or

####  

#### (5)          any indebtedness underany bond, debenture, note or other evidence of indebtedness for money borrowedby the Company or any Significant Subsidiary (all or substantially all of theoutstanding voting securities of which are owned, directly or indirectly, bythe Company) or under any mortgage, indenture or instrument under which theremay be issued or by which there may be secured or evidenced any indebtedness formoney borrowed by the Company or any Significant Subsidiary (all orsubstantially all of the outstanding voting securities of which are owned,directly or indirectly, by the Company) (an “Instrument”) with a principalamount then outstanding in excess of U.S. $30,000,000, whether suchindebtedness now exists or shall hereafter be created, is not paid at finalmaturity of the Instrument (either at its stated maturity or upon accelerationthereof), and such indebtedness is not discharged, or such acceleration is notrescinded or annulled, within a period of 30 days after there shall have beengiven, by registered or certified mail, to the Company by the Trustee or to theCompany and the Trustee by the Holders of at least 25% in aggregate principalamount of the then outstanding Securities a written notice specifying suchdefault and requiring the Company to cause such indebtedness to be dischargedor cause such default to be cured or waived or such acceleration to berescinded or annulled and stating that such notice is a “Notice of Default”hereunder; or

####  

#### (6)          the Company or anySignificant Subsidiary, pursuant to or within the meaning of any BankruptcyLaw:

#####  

##### (A)      commences a voluntary caseor proceeding;

#####  

##### (B)        consents to the entry ofan order for relief against it in an involuntary case or proceeding;

 

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##### (C)        consents to theappointment of a Custodian of it or for all or substantially all of itsproperty; or

#####  

##### (D)       makes a general assignmentfor the benefit of its creditors; or

####  

#### (7)          a court of competentjurisdiction enters an order or decree under any Bankruptcy Law that:

#####  

##### (A)      is for relief against theCompany or any Significant Subsidiary in an involuntary case or proceeding;

#####  

##### (B)        appoints a Custodian ofthe Company or any Significant Subsidiary or for all or substantially all ofthe property of the Company or any Significant Subsidiary; or

#####  

##### (C)        orders the liquidation ofthe Company or any Significant Subsidiary;

#####  

##### and in each case the order or decree remains unstayedand in effect for 60 consecutive days.

 

The term “Bankruptcy Law”means Title 11 of the United States Code (or any successor thereto) or anysimilar federal or state law for the relief of debtors.  The term “Custodian” means any receiver,trustee, assignee, liquidator, sequestrator or similar official under anyBankruptcy Law.

 

A default underclause (3) above is not an Event of Default until the Trustee notifies theCompany, or the Holders of at least 25% in aggregate principal amount of theSecurities then outstanding notify the Company and the Trustee, in writing ofthe default, and the Company does not cure the default within 60 days afterreceipt of such notice. The notice given pursuant to this Section 8.1 mustspecify the default, demand that it be remedied and state that the notice is a“Notice of Default.”  When any defaultunder this Section 8.1 is cured, it ceases.

 

The Trustee shall not becharged with knowledge of any Event of Default unless written notice thereofshall have been given to a Trust Officer at the Corporate Trust Office of theTrustee by the Company, a Paying Agent, any Holder or any agent of any Holder.

 

**SECTION 8.2.   ACCELERATION.**

 

If an Event of Default(other than an Event of Default specified in clause (6) or (7) of Section 8.1with respect to the Company) occurs and is continuing, the Trustee may, bynotice to the Company, or the Holders of at least 25% in aggregate principalamount of the Securities then outstanding may, by notice to the Company and theTrustee, declare all unpaid principal to the date of acceleration on theSecurities then outstanding (if not then due and payable) to be due and payableupon any such declaration, and the same shall become and be immediately due andpayable.  If an Event of Defaultspecified in clause (6) or (7) of Section 8.1 occurs with respect tothe Company, all unpaid principal of the Securities then outstanding shall ipsofacto become and be immediately due and payable without any declaration orother act on the part of the Trustee or any Holder.  The Holders of a majority in aggregate principal amount of theSecurities then outstanding by notice to the Trustee may rescind anacceleration and its consequences if (a) all existing Events of Default,other than the nonpayment of the principal of the Securities which has becomedue solely by such declaration of acceleration, have been cured or waived;(b) to the extent the payment of such interest is lawful, interest(calculated at the rate per annum borne by the Securities) on overdue installmentsof interest

 

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and overdue principal,which has become due otherwise than by such declaration of acceleration, hasbeen paid; (c) the rescission would not conflict with any judgment ordecree of a court of competent jurisdiction; and (d) all payments due tothe Trustee and any predecessor Trustee under Section 9.7 have beenmade.  No such rescission shall affectany subsequent default or impair any right consequent thereto.

 

**SECTION 8.3.   OTHER REMEDIES.**

 

If an Event of Defaultoccurs and is continuing, the Trustee may, but shall not be obligated to,pursue any available remedy by proceeding at law or in equity to collect thepayment of the principal of or interest on the Securities or to enforce theperformance of any provision of the Securities or this Indenture.

 

The Trustee may maintaina proceeding even if it does not possess any of the Securities or does notproduce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercisingany right or remedy accruing upon an Event of Default shall not impair theright or remedy or constitute a waiver of or acquiescence in the Event ofDefault.  No remedy is exclusive of anyother remedy.  All available remediesare cumulative to the extent permitted by law.

 

**SECTION8.4.   WAIVER OF DEFAULTS AND EVENTS OFDEFAULT.**

 

Subject toSections 8.7 and 11.2, the Holders of a majority in aggregate principalamount of the Securities then outstanding by notice to the Trustee may waive anexisting default or Event of Default and its consequence, except a default orEvent of Default in the payment of the principal of, premium, if any, orinterest on any Security, a failure by the Company to convert any Securitiesinto Common Stock or any default or Event of Default in respect of anyprovision of this Indenture or the Securities which, under Section 11.2,cannot be modified or amended without the consent of the Holder of eachSecurity affected.  When a default orEvent of Default is waived, it is cured and ceases.

 

**SECTION8.5.   CONTROL BY MAJORITY.**

 

The Holders of a majorityin aggregate principal amount of the Securities then outstanding may direct thetime, method and place of conducting any proceeding for any remedy available tothe Trustee or exercising any trust or power conferred on it.  However, the Trustee may refuse to followany direction that conflicts with law or this Indenture, that the Trusteedetermines may be unduly prejudicial to the rights of another Holder or theTrustee, or that may involve the Trustee in personal liability unless theTrustee is offered indemnity satisfactory to it; provided, however,that the Trustee may take any other action deemed proper by the Trustee whichis not inconsistent with such direction.

 

**SECTION8.6.   LIMITATIONS ON SUITS.**

 

A Holder may not pursueany remedy with respect to this Indenture or the Securities (except actions forpayment of overdue principal or interest (including any payments in connectionwith a Change in Control) or for the conversion of the Securities pursuant toArticle 4) unless:

####  

#### (1)          the Holder gives to theTrustee written notice of a continuing Event of Default;

####  

#### (2)          the Holders of at least25% in aggregate principal amount of the then outstanding Securities make a writtenrequest to the Trustee to pursue the remedy;

 

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#### (3)          such Holder or Holdersoffer to the Trustee reasonable indemnity to the Trustee against any loss,liability or expense;

####  

#### (4)          the Trustee does not complywith the request within 60 days after receipt of the request and the offer ofindemnity; and

####  

#### (5)          no directioninconsistent with such written request has been given to the Trustee duringsuch 60-day period by the Holders of a majority in aggregate principal amountof the Securities then outstanding.

 

A Securityholder may notuse this Indenture to prejudice the rights of another Securityholder or toobtain a preference or priority over such other Securityholder.

 

**SECTION8.7.   RIGHTS OF HOLDERS TO RECEIVEPAYMENT AND TO CONVERT.**

 

Notwithstanding any otherprovision of this Indenture, the right of any Holder of a Security to receivepayment of the principal of and interest on the Security (including anypayments in connection with a Change in Control), on or after the respectivedue dates expressed in the Security and this Indenture, to convert suchSecurity accordance with Article 4 and to bring suit for the enforcementof any such payment on or after such respective dates or the right to convert,is absolute and unconditional and shall not be impaired or affected without theconsent of the Holder.

 

**SECTION8.8.   COLLECTION SUIT BY TRUSTEE.**

 

If an Event of Default inthe payment of principal or interest specified in clause (1) or (2) ofSection 8.1 occurs and is continuing, the Trustee may recover judgment inits own name and as trustee of an express trust against the Company or anotherobligor on the Securities for the whole amount of principal and accruedinterest remaining unpaid, together with, to the extent that payment of suchinterest is lawful, interest on overdue principal and on overdue installmentsof interest, in each case at the rate per annum borne by the Securities andsuch further amount as shall be sufficient to cover the costs and expenses ofcollection, including the reasonable compensation, expenses, disbursements andadvances of the Trustee, its agents and counsel.

 

**SECTION8.9.   TRUSTEE MAY FILE PROOFS OF CLAIM.**

 

The Trustee may file suchproofs of claim and other papers or documents as may be necessary or advisablein order to have the claims of the Trustee (including any claim for thereasonable compensation, expenses, disbursements and advances of the Trustee,its agents and counsel) and the Holders allowed in any judicial proceedingsrelative to the Company (or any other obligor on the Securities), its creditorsor its property and shall be entitled and empowered to collect and receive anymoney or other property payable or deliverable on any such claims and todistribute the same, and any Custodian in any such judicial proceeding ishereby authorized by each Holder to make such payments to the Trustee and, inthe event that the Trustee shall consent to the making of such paymentsdirectly to the Holders, to pay to the Trustee any amount due to it for thereasonable compensation, expenses, disbursements and advances of the Trustee,its agents and counsel, and any other amounts due the Trustee underSection 9.7, and to the extent that such payment of the reasonablecompensation, expenses, disbursements and advances in any such proceedingsshall be denied for any reason, payment of the same shall be secured by a lienon, and shall be paid out of, any and all distributions, dividends, money,securities and other property which the Holders may be entitled to receive in

 

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such proceedings, whetherin liquidation or under any plan of reorganization or arrangement orotherwise.  Nothing herein containedshall be deemed to authorize the Trustee to authorize or consent to, or, onbehalf of any Holder, to authorize, accept or adopt any plan of reorganization,arrangement, adjustment or composition affecting the Securities or the rightsof any Holder thereof, or to authorize the Trustee to vote in respect of theclaim of any Holder in any such proceeding.

 

**SECTION 8.10.   PRIORITIES.**

 

If the Trustee collectsany money pursuant to this Article 8, it shall pay out the money in thefollowing order:

 

First, to the Trustee foramounts due under Section 9.7;

 

Second, to the holders ofSenior Indebtedness to the extent required by Article 5;

 

Third, to Holders foramounts due and unpaid on the Securities for principal and interest (includingAdditional Interest, if any), ratably, without preference or priority of anykind, according to the amounts due and payable on the Securities for principaland interest (including Additional Interest, if any), respectively; and

 

Fourth, the balance, ifany, to the Company.

 

The Trustee may fix arecord date and payment date for any payment to Holders pursuant to thisSection 8.10.

 

**SECTION8.11.   UNDERTAKING FOR COSTS.**

 

In any suit for theenforcement of any right or remedy under this Indenture or in any suit againstthe Trustee for any action taken or omitted by it as Trustee, a court in itsdiscretion may require the filing by any party litigant in the suit of anundertaking to pay the costs of the suit, and the court in its discretion mayassess reasonable costs, including reasonable attorneys’ fees and expenses, againstany party litigant in the suit, having due regard to the merits and good faithof the claims or defenses made by the party litigant.  This Section 8.11 does not apply to a suit made by theTrustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holdersof more than 10% in aggregate principal amount of the Securities thenoutstanding.

 

# **ARTICLE 9TRUSTEE**

 

**SECTION 9.1.   DUTIES OF TRUSTEE.**

 

### (a)          If an Event of Defaulthas occurred and is continuing, the Trustee shall exercise such of the rights andpowers vested in it by this Indenture and use the same degree of care and skillin its exercise as a prudent person would exercise or use under thecircumstances in the conduct of his or her own affairs.

###  

### (b)         Except during thecontinuance of an Event of Default:

####  

#### (1)          the Trustee need performonly those duties as are specifically set forth in this Indenture and noothers; and

 

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#### (2)          in the absence of badfaith on its part, the Trustee may conclusively rely, as to the truth of thestatements and the correctness of the opinions expressed therein, uponcertificates or opinions furnished to the Trustee and conforming to therequirements of this Indenture.  TheTrustee, however, shall examine any certificates and opinions which by anyprovision hereof are specifically required to be delivered to the Trustee todetermine whether or not they conform to the requirements of this Indenture.

###  

### (c)          The Trustee may not berelieved from liability for its own negligent action, its own negligent failureto act, or its own willful misconduct, except that:

####  

#### (1)          this paragraph does notlimit the effect of subsection (b) of this Section 9.1;

####  

#### (2)          the Trustee shall not beliable for any error of judgment made in good faith by a Trust Officer, unlessit is proved that the Trustee was negligent in ascertaining the pertinentfacts; and

####  

#### (3)          the Trustee shall not beliable with respect to any action it takes or omits to take in good faith inaccordance with a direction received by it pursuant to Section 8.5.

###  

### (d)         No provision of thisIndenture shall require the Trustee to expend or risk its own funds orotherwise incur any financial liability in the performance of any of its dutieshereunder or in the exercise of any of its rights or powers unless the Trusteeshall have received adequate indemnity in its opinion against potential costsand liabilities incurred by it relating thereto.

###  

### (e)          Every provision of thisIndenture that in any way relates to the Trustee is subject to subsections (a),(b), (c) and (d) of this Section 9.1.

###  

### (f)            The Trustee shall notbe liable for interest on any money received by it except as the Trustee mayagree in writing with the Company. Money held in trust by the Trustee need not be segregated from other fundsexcept to the extent required by law.

 

**SECTION 9.2.   RIGHTS OF TRUSTEE.**

 

Subject toSection 9.1:

###  

### (a)          The Trustee may relyconclusively on any document believed by it to be genuine and to have beensigned or presented by the proper person. The Trustee need not investigate any fact or matter stated in thedocument.

###  

### (b)         Before the Trustee actsor refrains from acting, it may require an Officers’ Certificate or an Opinionof Counsel, which shall conform to Section 12.4(b).  The Trustee shall not be liable for anyaction it takes or omits to take in good faith in reliance on such Officers’Certificate or Opinion.

###  

### (c)          The Trustee may actthrough its agents and shall not be responsible for the misconduct ornegligence of any agent appointed with due care.

###  

### (d)         The Trustee shall not beliable for any action it takes or omits to take in good faith which it believesto be authorized or within its rights or powers.

###  

### (e)          The Trustee may consultwith counsel of its selection, and the advice or opinion of such counsel as tomatters of law shall be full and complete authorization and protection inrespect of any such action

 

46

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### taken, omitted orsuffered by it hereunder in good faith and in accordance with the advice oropinion of such counsel.

###  

### (f)            The Trustee shall beunder no obligation to exercise any of the rights or powers vested in it bythis Indenture at the request or direction of any of the Holders pursuant tothis Indenture, unless such Holders shall have offered to the Trustee securityor indemnity satisfactory to the Trustee against the costs, expenses andliabilities which might be incurred by it in compliance with such request ordirection.

###  

### (g)         The Trustee shall not bebound to make any investigation into the facts or matters stated in anyresolution, certificate, statement, instrument, opinion, report, notice,request, direction, consent, order, bond, debenture, note, other evidence ofindebtedness or other paper or document, but the Trustee, in its discretion,may make such further inquiry or investigation into such facts or matters as itmay see fit, and, if the Trustee shall determine to make such further inquiryor investigation, it shall be entitled to examine the books, records andpremises of the Company, personally or by agent or attorney at the sole cost ofthe Company and shall incur no liability or additional liability of any kind byreason of such inquiry or investigation.

###  

### (h)         The Trustee shall not bedeemed to have notice of any Default or Event of Default unless a Trust Officerof the Trustee has actual knowledge thereof or unless written notice of anyevent which is in fact such a default is received by the Trustee at theCorporate Trust Office, and such notice references the Securities and thisIndenture.

###  

### (i)             The rights,privileges, protections, immunities and benefits given to the Trustee,including, without limitation, its right to be indemnified, are extended to,and shall be enforceable by, the Trustee in each of its capacities hereunder,and to each agent, custodian and other Person employed to act hereunder.

 

**SECTION9.3.   INDIVIDUAL RIGHTS OF TRUSTEE.**

 

The Trustee in itsindividual or any other capacity may become the owner or pledgee of Securitiesand may otherwise deal with the Company or an Affiliate of the Company with thesame rights it would have if it were not Trustee.  Any Agent may do the same with like rights.  However, the Trustee is subject to Sections 9.10and 9.11.

 

**SECTION9.4.   TRUSTEE’S DISCLAIMER.**

 

The Trustee makes norepresentation as to the validity or adequacy of this Indenture or theSecurities, it shall not be accountable for the Company’s use of the proceedsfrom the Securities, and it shall not be responsible for any statement in theSecurities other than its certificate of authentication.

 

**SECTION9.5.   NOTICE OF DEFAULT OR EVENTS OFDEFAULT.**

 

If a default or an Eventof Default occurs and is continuing and if it is known to the Trustee, theTrustee shall mail to each Securityholder notice of the default or Event ofDefault within 90 days after it occurs. However, the Trustee may withhold the notice if and so long as acommittee of its Trust Officers in good faith determines that withholdingnotice is in the interests of Securityholders, except in the case of a defaultor an Event of Default in payment of the principal of or interest on anySecurity.

 

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**SECTION9.6.   REPORTS BY TRUSTEE TO HOLDERS.**

 

If such report isrequired by TIA Section 313, within 60 days after each May 15, beginningwith May 15, 2004, the Trustee shall mail to each Securityholder a brief reportdated as of such March 15 that complies with TIA Section 313(a).  The Trustee also shall comply with TIASection 313(b)(2) and (c).

 

A copy of each report atthe time of its mailing to Securityholders shall be mailed to the Company andfiled with the SEC and each stock exchange, if any, on which the Securities arelisted.  The Company shall notify theTrustee whenever the Securities become listed on any stock exchange or listedor admitted to trading on any quotation system and any changes in the stockexchanges or quotation systems on which the Securities are listed or admittedto trading and of any delisting thereof.

 

**SECTION9.7.   COMPENSATION AND INDEMNITY.**

 

The Company shall pay tothe Trustee from time to time such compensation (as agreed to from time to timeby the Company and the Trustee in writing) for its services (which compensationshall not be limited by any provision of law in regard to the compensation of atrustee of an express trust).  TheCompany shall reimburse the Trustee upon request for all reasonabledisbursements, expenses and advances incurred or made by it.  Such expenses may include the reasonablecompensation, disbursements and expenses of the Trustee’s agents and counsel.

 

The Company shallindemnify the Trustee or any predecessor Trustee (which for purposes of thisSection 9.7 shall include its officers, directors, employees and agents)for, and hold it harmless against, any and all loss, liability or expenseincluding taxes (other than taxes based upon, measured by or determined by theincome of the Trustee), (including reasonable legal fees and expenses) incurredby it in connection with the acceptance or administration of its duties underthis Indenture or any action or failure to act as authorized or within thediscretion or rights or powers conferred upon the Trustee hereunder includingthe reasonable costs and expenses of the Trustee and its counsel in defendingitself against any claim or liability in connection with the exercise orperformance of any of its powers or duties hereunder.  The Trustee shall notify the Company promptly of any claimasserted against the Trustee for which it may seek indemnity.  The Company need not pay for any settlementeffected without its prior written consent, which shall not be unreasonablywithheld.

 

The Company need notreimburse the Trustee for any expense or indemnify it against any loss orliability incurred by it resulting from its gross negligence or bad faith.

 

To secure the Company’spayment obligations in this Section 9.7, the Trustee shall have a seniorclaim to which the Securities are hereby made subordinate on all money orproperty held or collected by the Trustee, except such money or property heldin trust to pay the principal of and interest on the Securities.  The obligations of the Company under thisSection 9.7 shall survive the satisfaction and discharge of this Indentureor the resignation or removal of the Trustee.

 

When the Trustee incursexpenses or renders services after an Event of Default specified inclause (7) or (8) of Section 8.1 occurs, the expenses and thecompensation for the services are intended to constitute expenses ofadministration under any Bankruptcy Law. The provisions of thisSection shall survive the termination of this Indenture.

 

48

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**SECTION9.8.   REPLACEMENT OF TRUSTEE.**

 

The Trustee may resign byso notifying the Company.  The Holdersof a majority in aggregate principal amount of the Securities then outstandingmay remove the Trustee by so notifying the Trustee and may, with the Company’swritten consent (which consent shall not be unreasonably withheld), appoint asuccessor Trustee.  The Company mayremove the Trustee if:

####  

#### (1)          the Trustee fails tocomply with Section 9.10;

####  

#### (2)          the Trustee is adjudgeda bankrupt or an insolvent;

####  

#### (3)          a receiver or otherpublic officer takes charge of the Trustee or its property; or

####  

#### (4)          the Trustee becomes incapableof acting.

 

If the Trustee resigns oris removed or if a vacancy exists in the office of Trustee for any reason, theCompany shall promptly appoint a successor Trustee.  The resignation or removal of a Trustee shall not be effectiveuntil a successor Trustee shall have delivered the written acceptance of itsappointment as described below.

 

If a successor Trusteedoes not take office within 45 days after the retiring Trustee resigns or isremoved, the retiring Trustee, the Company or the Holders of 10% in principalamount of the Securities then outstanding may petition any court of competentjurisdiction for the appointment of a successor Trustee at the expense of theCompany.

 

If the Trustee fails tocomply with Section 9.10, any Holder may petition any court of competentjurisdiction for the removal of the Trustee and the appointment of a successorTrustee.

 

A successor Trustee shalldeliver a written acceptance of its appointment to the retiring Trustee and tothe Company.  Immediately after that, theretiring Trustee shall transfer all property held by it as Trustee to thesuccessor Trustee and be released from its obligations (exclusive of anyliabilities that the retiring Trustee may have incurred while acting asTrustee) hereunder, the resignation or removal of the retiring Trustee shallbecome effective, and the successor Trustee shall have all the rights, powersand duties of the Trustee under this Indenture.  A successor Trustee shall mail notice of its succession to eachHolder.

 

A retiring Trustee shallnot be liable for the acts or omissions of any successor Trustee after itssuccession.

 

Notwithstandingreplacement of the Trustee pursuant to this Section 9.8, the Company’sobligations under Section 9.7 shall continue for the benefit of the retiringTrustee.

 

**SECTION9.9.   SUCCESSOR TRUSTEE BY MERGER, ETC.**

 

If the Trusteeconsolidates with, merges or converts into, or transfers all or substantiallyall of its corporate trust assets (including the administration of thisIndenture) to, another corporation, the resulting, surviving or transfereecorporation, without any further act, shall be the successor Trustee, providedsuch transferee corporation shall qualify and be eligible underSection 9.10.  Such successorTrustee shall promptly mail notice of its succession to the Company and eachHolder.

 

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**SECTION9.10.   ELIGIBILITY; DISQUALIFICATION.**

 

The Trustee shall alwayssatisfy the requirements of paragraphs (1), (2) and (5) of TIASection 310(a).  The Trustee (orits parent holding company) shall have a combined capital and surplus of atleast $50,000,000.  If at any time theTrustee shall cease to satisfy any such requirements, it shall resignimmediately in the manner and with the effect specified in thisArticle 9.  The Trustee shall besubject to the provisions of TIA Section 310(b).  Nothing herein shall prevent the Trustee from filing with the SECthe application referred to in the penultimate paragraph of TIASection 310(b).

 

**SECTION9.11.   PREFERENTIAL COLLECTION OFCLAIMS AGAINST COMPANY.**

 

The Trustee shall complywith TIA Section 311(a), excluding any creditor relationship listed in TIASection 311(b).  A Trustee who hasresigned or been removed shall be subject to TIA Section 311(a) to theextent indicated therein.

 

# **ARTICLE10SATISFACTION AND DISCHARGE OF INDENTURE**

 

**SECTION10.1.   SATISFACTION AND DISCHARGE OFINDENTURE.**

 

This Indenture shallcease to be of further effect (except as to any surviving rights of conversion,registration of transfer or exchange of Securities herein expressly providedfor and except as further provided below), and the Trustee, on demand of and atthe expense of the Company, shall execute proper instruments acknowledgingsatisfaction and discharge of this Indenture, when

####  

#### (1)          either

#####  

##### (A)      all Securities theretoforeauthenticated and delivered (other than (i) Securities which have beendestroyed, lost or stolen and which have been replaced or paid as provided inSection 2.7 and (ii) Securities for whose payment money hastheretofore been deposited in trust and thereafter repaid to the Company asprovided in Section 10.3) have been delivered to the Trustee forcancellation; or

#####  

##### (B)        all such Securities nottheretofore delivered to the Trustee for cancellation have become due andpayable and the Company has irrevocably deposited or caused to be irrevocablydeposited cash with the Trustee or a Paying Agent (other than the Company orany of its Affiliates) as trust funds in trust for the purpose of and in anamount sufficient to pay and discharge the entire indebtedness on suchSecurities not theretofore delivered to the Trustee for cancellation, forprincipal and interest (including Additional Interest, if any) to the date ofsuch deposit (in the case of Securities which have become due and payable);

####  

#### (2)          the Company has paid orcaused to be paid all other sums payable hereunder by the Company; and

####  

#### (3)          the Company hasdelivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,each stating that all conditions precedent herein relating to the satisfactionand discharge of this Indenture have been complied with.

 

50

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Notwithstanding thesatisfaction and discharge of this Indenture, the obligations of the Company tothe Trustee under Section 9.7 shall survive and, if money shall have beendeposited with the Trustee pursuant to subclause (B) of clause (1) ofthis Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.12,3.2, 3.3, 3.4, 3.5, 3.6, 3.7 and 12.5, Article 4, the last paragraph ofSection 6.2 and this Article 10, shall survive until the Securitieshave been paid in full.

 

**SECTION10.2.   APPLICATION OF TRUST MONEY.**

 

Subject to the provisionsof Section 10.3, the Trustee or a Paying Agent shall hold in trust, forthe benefit of the Holders, all money deposited with it pursuant toSection 10.1 and shall apply the deposited money in accordance with thisIndenture and the Securities to the payment of the principal of and interest onthe Securities.  Money so held in trustshall not be subject to the subordination provisions of Article 5.

 

**SECTION10.3.   REPAYMENT TO COMPANY.**

 

The Trustee and eachPaying Agent shall promptly pay to the Company upon request any excess money(i) deposited with them pursuant to Section 10.1 and (ii) heldby them at any time.

 

The Trustee and eachPaying Agent shall pay to the Company upon request any money held by them forthe payment of principal or interest that remains unclaimed for two years aftera right to such money has matured; provided, however, that theTrustee or such Paying Agent, before being required to make any such payment,may at the expense of the Company cause to be mailed to each Holder entitled tosuch money notice that such money remains unclaimed and that after a datespecified therein, which shall be at least 30 days from the date of suchmailing, any unclaimed balance of such money then remaining will be repaid tothe Company.  After payment to the Company,Holders entitled to money must look to the Company for payment as generalcreditors unless an applicable abandoned property law designates anotherperson.

 

**SECTION 10.4.   REINSTATEMENT.**

 

If the Trustee or anyPaying Agent is unable to apply any money in accordance with Section 10.2by reason of any legal proceeding or by reason of any order or judgment of anycourt or governmental authority enjoining, restraining or otherwise prohibitingsuch application, then the Company’s obligations under this Indenture and theSecurities shall be revived and reinstated as though no deposit had occurredpursuant to Section 10.1 until such time as the Trustee or such PayingAgent is permitted to apply all such money in accordance withSection 10.2; provided, however, that if the Company hasmade any payment of the principal of or interest on any Securities because ofthe reinstatement of its obligations, the Company shall be subrogated to therights of the Holders of such Securities to receive any such payment from themoney held by the Trustee or such Paying Agent.

 

# **ARTICLE 11**

# **AMENDMENTS, SUPPLEMENTS AND WAIVERS**

 

**SECTION11.1.   WITHOUT CONSENT OF HOLDERS.**

 

The Company and theTrustee may amend or supplement this Indenture or the Securities without noticeto or consent of any Securityholder:

###  

### (a)          to comply withSections 4.11 and 7.1;

 

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### (b)         to cure any ambiguity,defect or inconsistency;

###  

### (c)          to make any other changethat does not adversely affect the rights of any Securityholder;

###  

### (d)         to comply with the provisionsof the TIA;

###  

### (e)          to add to the covenantsof the Company for the equal and ratable benefit of the Securityholders or tosurrender any right, power or option conferred upon the Company; or

###  

### (f)            to appoint a successorTrustee.

 

**SECTION11.2.   WITH CONSENT OF HOLDERS.**

 

The Company and theTrustee may amend or supplement this Indenture or the Securities with thewritten consent of the Holders of at least a majority in aggregate principalamount of the Securities then outstanding. The Holders of at least a majority in aggregate principal amount of theSecurities then outstanding may waive compliance in a particular instance bythe Company with any provision of this Indenture or the Securities withoutnotice to any Securityholder.  However,notwithstanding the foregoing but subject to Section 11.4, without thewritten consent of each Securityholder affected, an amendment, supplement orwaiver, including a waiver pursuant to Section 8.4, may not:

###  

### (a)          change the statedmaturity of the principal of, or time or manner of payment of interest on, anySecurity;

###  

### (b)         reduce the principalamount of, or any premium or interest on, any Security;

###  

### (c)          reduce the amount ofprincipal payable upon acceleration of the maturity of any Security;

###  

### (d)         change the place or currencyof payment of principal of, or any premium or interest on, any Security;

###  

### (e)          impair the right toinstitute suit for the enforcement of any payment on, or with respect to, anySecurity;

###  

### (f)            modify the provisionswith respect to the purchase right of Holders pursuant to Article 3 upon aChange in Control in a manner adverse to Holders;

###  

### (g)         modify the subordinationprovisions of Article 5 in a manner adverse to the Holders of Securities;

###  

### (h)         adversely affect theright of Holders to convert Securities other than as provided in or underArticle 4 of this Indenture;

###  

### (i)             reduce the percentageof the aggregate principal amount of the outstanding Securities whose Holdersmust consent to a modification or amendment;

###  

### (j)             reduce the percentageof the aggregate principal amount of the outstanding Securities necessary forthe waiver of compliance with certain provisions of this Indenture or thewaiver of certain defaults under this Indenture; and

 

52

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### (k)          modify any of theprovisions of this Section or Section 8.4, except to increase any suchpercentage or to provide that certain provisions of this Indenture cannot bemodified or waived without the consent of the Holder of each outstandingSecurity affected thereby.

 

It shall not be necessaryfor the consent of the Holders under this Section 11.2 to approve theparticular form of any proposed amendment, supplement or waiver, but it shallbe sufficient if such consent approves the substance thereof.

 

After an amendment,supplement or waiver under this Section 11.2 becomes effective, theCompany shall mail to the Holders affected thereby a notice briefly describingthe amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein,shall not, however, in any way impair or affect the validity of any suchamendment, supplement or waiver. An amendment or supplement under thisSection 11.2 or under Section 11.1 may not make any change thatadversely affects the rights under Article 5 of any holder of an issue ofSenior Indebtedness unless the holders of that issue, pursuant to its terms,consent to the change.

 

**SECTION11.3.   COMPLIANCE WITH TRUST INDENTUREACT.**

 

Every amendment to orsupplement of this Indenture or the Securities shall comply with the TIA as ineffect at the date of such amendment or supplement.

 

**SECTION11.4.   REVOCATION AND EFFECT OFCONSENTS.**

 

Until an amendment,supplement or waiver becomes effective, a consent to it by a Holder is acontinuing consent by the Holder and every subsequent Holder of a Security orportion of a Security that evidences the same debt as the consenting Holder’sSecurity, even if notation of the consent is not made on any Security.  However, any such Holder or subsequentHolder may revoke the consent as to its Security or portion of a Security ifthe Trustee receives the notice of revocation before the date the amendment,supplement or waiver becomes effective.

 

After an amendment,supplement or waiver becomes effective, it shall bind every Securityholder,unless it makes a change described in any of clauses (a) through (k) ofSection 11.2.  In that case theamendment, supplement or waiver shall bind each Holder of a Security who hasconsented to it and every subsequent Holder of a Security or portion of aSecurity that evidences the same debt as the consenting Holder’s Security.

 

**SECTION11.5.   NOTATION ON OR EXCHANGE OFSECURITIES.**

 

If an amendment,supplement or waiver changes the terms of a Security, the Trustee may requirethe Holder of the Security to deliver it to the Trustee.  The Trustee may place an appropriatenotation on the Security about the changed terms and return it to theHolder.  Alternatively, if the Companyor the Trustee so determines, the Company in exchange for the Security shallissue and the Trustee shall authenticate a new Security that reflects thechanged terms.

 

**SECTION11.6.   TRUSTEE TO SIGN AMENDMENTS, ETC.**

 

The Trustee shall signany amendment or supplemental indenture authorized pursuant to thisArticle 11 if the amendment or supplemental indenture does not adverselyaffect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, in its solediscretion, but need not sign it.  Insigning

 

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or refusing to sign suchamendment or supplemental indenture, the Trustee shall be entitled to receiveand, subject to Section 9.1, shall be fully protected in relying upon, anOpinion of Counsel stating that such amendment or supplemental indenture isauthorized or permitted by this Indenture. The Company may not sign an amendment or supplement indenture until theBoard of Directors approves it.

 

**SECTION11.7.   EFFECT OF SUPPLEMENTALINDENTURES.**

 

Upon the execution of anysupplemental indenture under this Article, this Indenture shall be modified inaccordance therewith, and such supplemental indenture shall form a part of thisIndenture for all purposes; and every Holder of Securities theretofore orthereafter authenticated and delivered hereunder shall be bound thereby.

 

# **ARTICLE 12MISCELLANEOUS**

 

**SECTION12.1.   TRUST INDENTURE ACT CONTROLS.**

 

If any provision of thisIndenture limits, qualifies or conflicts with the duties imposed by any ofSections 310 to 317, inclusive, of the TIA through operation ofSection 318(c) thereof, such imposed duties shall control.

 

**SECTION 12.2.   NOTICES.**

 

Any demand, authorizationnotice, request, consent or communication shall be given in writing anddelivered in person or mailed by first-class mail, postage prepaid, addressedas follows or transmitted by facsimile transmission (confirmed by delivery inperson or mail by first-class mail, postage prepaid, or by guaranteed overnightcourier) to the following facsimile numbers:

 
| If to the Company, to:                                                               |                                                                   |   |
|--------------------------------------------------------------------------------------|------------------------------------------------------------------------|--------|
|                                                                                 |                                                                   |   |
| UTStarcom, Inc.                                                                      |                                                                   |   |
| 1275 Harbor Bay Parkway                                                              |                                                                   |   |
| Alameda, California  94502                                                           |                                                                   |   |
| Attention: Michael J.  Sophie, Vice President of Finance and Chief Financial Officer |
| Facsimile No. (510)  864-8802                                                        |                                                                   |   |
|                                                                                 |                                                                   |   |
| if to the Trustee, to:                                                               |                                                                   |   |
|                                                                                 |                                                                   |   |
| U.S. Bank National Association                                                       |                                                                   |   |
| 550 S. Hope Street, Suite 500                                                        |                                                                   |   |
| Los Angeles, CA   90071                                                         |                                                                   |   |
| Attn:                                                                                | Corporate Trust Services                                               |
|                                                                                 | (UTStarcom, Inc. — 7/8% Convertible Subordinated  Notes Due 2008) |
| Facsimile No.: (213) 533-8729                                                        |                                                                   |   |
|                                                                                      |                                                                        |        |  |

 

Such notices orcommunications shall be effective when received.

 

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The Company or theTrustee by notice to the other may designate additional or different addressesfor subsequent notices or communications.

 

Any notice orcommunication mailed to a Securityholder shall be mailed by first-class mail ordelivered by an overnight delivery service to it at its address shown on theregister kept by the Primary Registrar.

 

Failure to mail a noticeor communication to a Securityholder or any defect in it shall not affect itssufficiency with respect to other Securityholders.  If a notice or communication to a Securityholder is mailed in themanner provided above, it is duly given, whether or not the addressee receivesit.

 

**SECTION12.3.   COMMUNICATIONS BY HOLDERS WITHOTHER HOLDERS.**

 

Securityholders maycommunicate pursuant to TIA Section 312(b) with other Securityholders withrespect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar andany other person shall have the protection of TIA Section 312(c).

 

**SECTION12.4.   CERTIFICATE AND OPINION AS TOCONDITIONS PRECEDENT.**

###  

### (a)          Upon any request orapplication by the Company to the Trustee to take any action under thisIndenture, the Company shall furnish to the Trustee at the request of theTrustee:

####  

#### (1)          an Officers’ Certificatestating that, in the opinion of the signers, all conditions precedent(including any covenants, compliance with which constitutes a conditionprecedent), if any, provided for in this Indenture relating to the proposedaction have been complied with; and

####  

#### (2)          an Opinion of Counselstating that, in the opinion of such counsel, all such conditions precedent(including any covenants, compliance with which constitutes a conditionprecedent) have been complied with.

###  

### (b)         Each Officers’Certificate and Opinion of Counsel with respect to compliance with a conditionor covenant provided for in this Indenture shall include:

####  

#### (1)          a statement that theperson making such certificate or opinion has read such covenant or condition;

####  

#### (2)          a brief statement as tothe nature and scope of the examination or investigation upon which thestatements or opinions contained in such certificate or opinion are based;

####  

#### (3)          a statement that, in theopinion of such person, he or she has made such examination or investigation asis necessary to enable him or her to express an informed opinion as to whetheror not such covenant or condition has been complied with; and

####  

#### (4)          a statement as towhether or not, in the opinion of such person, such condition or covenant hasbeen complied with;

 

providedhowever, that with respect to matters of fact an Opinion of Counsel mayrely on an Officers’ Certificate or certificates of public officials.

 

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**SECTION12.5.   RECORD DATE FOR VOTE OR CONSENTOF SECURITYHOLDERS.**

 

The Company (or, in theevent deposits have been made pursuant to Section 10.1, the Trustee) mayset a record date for purposes of determining the identity of Holders entitledto vote or consent to any action by vote or consent authorized or permittedunder this Indenture, which record date shall not be more than thirty (30) daysprior to the date of the commencement of solicitation of such action.  Notwithstanding the provisions ofSection 11.4, if a record date is fixed, those persons who were Holders ofSecurities at the close of business on such record date (or their dulydesignated proxies), and only those persons, shall be entitled to take suchaction by vote or consent or to revoke any vote or consent previously given,whether or not such persons continue to be Holders after such record date.

 

**SECTION 12.6****.   RULES BYTRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT.**

 

The Trustee may makereasonable rules (not inconsistent with the terms of this Indenture) for actionby or at a meeting of Holders.  AnyRegistrar, Paying Agent or Conversion Agent may make reasonable rules for itsfunctions.

 

**SECTION 12.7.   LEGAL HOLIDAYS.**

 

A “Legal Holiday” is aSaturday, Sunday or a day on which state or federally chartered bankinginstitutions in New York, New York and the state in which the Corporate TrustOffice is located are not required to be open. If a payment date is a Legal Holiday, payment shall be made on the nextsucceeding day that is not a Legal Holiday, and no interest shall accrue forthe intervening period.  If a regularrecord date is a Legal Holiday, the record date shall not be affected.

 

**SECTION 12.8.   GOVERNING LAW.**

 

This Indenture and theSecurities shall be governed by, and construed in accordance with, the laws ofthe State of New York.

 

**SECTION12.9.   NO ADVERSE INTERPRETATION OFOTHER AGREEMENTS.**

 

This Indenture may not beused to interpret another indenture, loan or debt agreement of the Company or aSubsidiary of the Company.  Any suchindenture, loan or debt agreement may not be used to interpret this Indenture.

 

**SECTION 12.10.   NO RECOURSE AGAINST OTHERS.**

All liability describedin paragraph 16 of the Securities of any director, officer, employee orshareholder, as such, of the Company is waived and released.

 

**SECTION 12.11.   SUCCESSORS.**

 

All agreements of theCompany in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in thisIndenture shall bind its successor.

 

56

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**SECTION12.12.   MULTIPLE COUNTERPARTS.**

 

The parties may signmultiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of themtogether represent the same agreement.

 

**SECTION 12.13.   SEPARABILITY.**

 

In case any provisions inthis Indenture or in the Securities shall be invalid, illegal or unenforceable,the validity, legality and enforceability of the remaining provisions shall notin any way be affected or impaired thereby.

 

**SECTION 12.14.****   TABLE OFCONTENTS, HEADINGS, ETC.**

 

The table of contents,cross-reference sheet and headings of the Articles and Sections of thisIndenture have been inserted for convenience of reference only, are not to beconsidered a part hereof, and shall in no way modify or restrict any of theterms or provisions hereof.

 

[Remainder of pageintentionally left blank].

 

57

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IN WITNESS WHEREOF, theparties hereto have hereunto set their hands as of the date and year firstabove written.

 
|   | **UTStarcom,  Inc.**                            |
|--------|-------------------------------------------------|
|   |                                            |
|   |                                            |
|   | By:                                             | /s/ Michael J. Sophie |
|   | Name:                                           | Michael J. Sophie |
|   | Title:                                          | Vice President of  Finance and Chief |
|   |                                            | Financial Officer |
|   |                                            |
|   |                                            |
|   | **U.S.  Bank National Association, as Trustee** |
|   |                                            |
|   |                                            |
|   | By:                                             | /s/ Stephen Rivero |
|   | Name:                                           | Stephen Rivero |
|   | Title:                                          | Vice President |

 

**[Signaturepage to Indenture]**

 

58

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**EXHIBIT A[FORM OF FACE OF SECURITY]**

 

[UNLESS THIS CERTIFICATEIS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TOUTSTARCOM, INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. ORIN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THEDEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THEDEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUEOR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITYWITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTEREDIN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THENAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITEDCIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGEDIN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BETRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARYOR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THEDEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARYOR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.](1)

 

[THIS SECURITY (OR ITSPREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATIONUNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND THISSECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAYNOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCHREGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THESELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OFSECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.](2)

 

THE HOLDER OF THISSECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY ANDTHE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED,RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TOA PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTIONMEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE

 

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(1)  These paragraphs should be included only ifthe Security is a Global Security.

 

(2)  These paragraphs to be included only if theSecurity is a Restricted Security.

 

A-1

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UNITED STATES IN ANOFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACTPROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OFCASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWSOF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACHSUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM ITOF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.](2)

 

[THE HOLDER OF THISSECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (ASSUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND,BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THEPROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.](2)

 

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(2)  These paragraphs to be included only if theSecurity is a Restricted Security.

 

A-2

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**UTSTARCOM,INC.**

** **
| CUSIP:  |                      |   |   | R- |                |
|--------------|--------------------------------------------------------------------------------------------------------------------------|--------|--------|----|--------------------------------------------------------------------------------------|

 

7/8% CONVERTIBLESUBORDINATED NOTES DUE 2008

 

UTStarcom, Inc., aDelaware corporation (the “Company”, which term shall include any successorcorporation under the Indenture referred to on the reverse hereof), promises topay to                            ,or registered assigns, the principal sum of                             Dollars ($          ) onMarch 1, 2008 [or such greater or lesser amount as is indicated on the Scheduleof Exchanges of Notes on the other side of this Note].(3)

 

Interest Payment Dates:            March 1 and September1

 

Record Dates:            February 15 and August15

 

This Note is convertibleas specified on the other side of this Note. Additional provisions of this Note are set forth on the other side ofthis Note.

 

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(3)  This phrase should be included only if theSecurity is a global Security.

 

A-3

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IN WITNESS WHEREOF, theCompany has caused this instrument to be duly executed.

 

 
|                                                                                                                               |                                                   |   | **UTSTARCOM, INC.** |
|------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------|---------------------|
|                                                                                                                               |                                                   |   |                |
|                                                                                                                               |                                                   |   |                |
|                                                                                                                               |                                                   |   | By:                 |   |
|                                                                                                                               |                                                   |   | Name:               | Hong Liang Lu |
|                                                                                                                               |                                                   |   | Title:              | President and  Chief Executive Officer |
| Attest:                                                                                                                            |                                                   |   |                |
|                                                                                                                               |                                                   |   |                |
|                                                                                                                               |                                                   |   |                |   |
| Name:                                                                                                                              | Michael J. Sophie                                      |   |                |   |
| Title:                                                                                                                             | Vice President of  Finance and Chief Financial Officer |   |                |   |
|                                                                                                                               |                                                   |
| Dated:                                                                                                                             | March 12, 2003                                         |   |                |   |
|                                                                                                                               |                                                   |
| Trustee’s Certificate  of Authentication:  This is one of the  Securities referred to in the within-mentioned Indenture. |
|                                                                                                                               |
| **U.S. BANK NATIONAL ASSOCIATION,**                                                                                                |                                                   |
| as Trustee                                                                                                                         |                                                   |
|                                                                                                                               |                                                   |   |                |   |
| By:                                                                                                                                |                                                   |   |                |   |
|                                                                                                                               |                                                   |   |                |
|                                                                                                                               |                                                   |   |                |   |
| Authorized Signatory                                                                                                               |                                                   |   |                |
|                                                                                                                                    |                                                        |        |                     |  |  |  |  |  |  |  |  |

 

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**[FORMOF REVERSE SIDE OF SECURITY]**

 

**UTSTARCOM,INC.7/8% CONVERTIBLE SUBORDINATED NOTES DUE 2008**

 

1.                                       INTEREST

 

UTStarcom, Inc., aDelaware corporation (the “Company,” which term shall include any successorcorporation under the Indenture hereinafter referred to), promises to payinterest on the principal amount of this Note at the rate of 7/8% perannum.  The Company shall pay interestsemiannually on March 1 and September 1 of each year, commencingSeptember 1, 2003.  Interest on theNotes shall accrue from the most recent date to which interest has been paidor, if no interest has been paid, from March 12, 2003; provided,however, that if there is not an existing default in the payment ofinterest and if this Note is authenticated between a record date referred to onthe face hereof and the next succeeding interest payment date, interest shallaccrue from such interest payment date. Interest will be computed on the basis of a 360-day year of twelve30-day months.  Any reference herein tointerest accrued or payable as of any date shall include any AdditionalInterest accrued or payable on such date as provided in the Registration RightsAgreement.

 

2.                                       METHODOF PAYMENT

 

The Company shall payinterest on this Note (except defaulted interest) to the person who is theHolder of this Note at the close of business on February 15 and August 15, asthe case may be, next preceding the related interest payment date.  The Holder must surrender this Note to aPaying Agent to collect payment of principal. The Company will pay principal and interest in money of the UnitedStates that at the time of payment is legal tender for payment of public andprivate debts.  The Company may,however, pay principal and interest in respect of any Certificated Security bycheck or wire payable in such money; provided, however, that aHolder with an aggregate principal amount in excess of $2,000,000 will be paidby wire transfer in immediately available funds at the election of such Holderif such Holder has provided wire transfer instructions to the Company.  The Company may mail an interest check tothe Holder’s registered address.  Notwithstandingthe foregoing, so long as this Note is registered in the name of a Depositaryor its nominee, all payments hereon shall be made by wire transfer ofimmediately available funds to the account of the Depositary or its nominee.

 

3.                                       PAYINGAGENT, REGISTRAR AND CONVERSION AGENT

 

Initially, U.S. BankNational Association (the “Trustee”, which term shall include any successortrustee under the Indenture hereinafter referred to) will act as Paying Agent,Registrar and Conversion Agent.  TheCompany may change any Paying Agent, Registrar or Conversion Agent withoutnotice to the Holder.  The Company orany of its Subsidiaries may, subject to certain limitations set forth in theIndenture, act as Paying Agent or Registrar.

 

4.                                       INDENTURE,LIMITATIONS

 

This Note is one of aduly authorized issue of Securities of the Company designated as its 7/8%Convertible Subordinated Notes due 2008 (the “Notes”), issued under anIndenture dated as of March 12, 2003 (together with any supplementalindentures thereto, the “Indenture”), between the Company and the Trustee.  The terms of this Note include those statedin the Indenture and those required by or made part of the Indenture byreference to the Trust Indenture Act of 1939, as amended, as in effect on thedate of the

 

A-5

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Indenture.  This Note is subject to all such terms, andthe Holder of this Note is referred to the Indenture and said Act for astatement of them.

 

The Notes aresubordinated unsecured obligations of the Company limited to $402,500,000aggregate principal amount.  The Indenturedoes not limit other debt of the Company, secured or unsecured, includingSenior Indebtedness.

 

5.                                       REDEMPTION

 

The Company may notredeem the notes at any time prior to March 1, 2008.

 

No sinking fund isprovided for the Notes.

 

6.                                       PURCHASEOF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL

 

At the option of theHolder and subject to the terms and conditions of the Indenture, the Companyshall become obligated to purchase all or any part specified by the Holder (solong as the principal amount of such part is $1,000 or an integral multiple of$1,000 in excess thereof) of the Notes held by such Holder on the date that is30 Business Days after the occurrence of a Change in Control, at a purchaseprice equal to 100% of the principal amount thereof together with accruedinterest up to, but excluding, the Change in Control Purchase Date.  The Holder shall have the right to withdrawany Change in Control Purchase Notice (in whole or in a portion thereof that is$1,000 or an integral multiple of $1,000 in excess thereof) at any time priorto the close of business on the second Business Day next preceding the Changein Control Purchase Date by delivering a written notice of withdrawal to thePaying Agent in accordance with the terms of the Indenture.

 

The Company may elect topay the Change in Control Purchase Price by delivery of shares of ApplicableStock if and only if the following conditions are satisfied:

####  

#### (1)          the shares of ApplicableStock deliverable in payment of the Change in Control Purchase Price shall havea fair market value as of the Change in Control Purchase Date of not less thanthe Change in Control Purchase Price. For purposes of this Section 6, the fairmarket value of shares of Applicable Stock shall be determined by the Companyand shall be equal to 97% of the average of the closing sale price of shares ofthe Applicable Stock for the five consecutive Trading Days immediatelypreceding the second Trading Day prior to the Change in Control Purchase Date;

####  

#### (2)          the Change in ControlPurchase Price shall be paid only in cash in the event any shares of ApplicableStock to be issued upon repurchase of Securities hereunder (i) requireregistration under any federal securities law before such shares may be freelytransferable without being subject to any transfer restrictions under theSecurities Act upon repurchase and if such registration is not completed ordoes not become effective prior to the Change in Control Purchase Date, and/or(ii) require registration with or approval of any governmental authority underany state law or any other federal law before such shares may be validly issuedor delivered upon repurchase and if such registration is not completed or doesnot become effective or such approval is not obtained prior to the Change inControl Purchase Date;

####  

#### (3)          payment of the Change inControl Purchase Price may not be made in Applicable Stock unless such stockis, or shall have been listed on a national securities exchange or approved forquotation on the Nasdaq National Market, in either case, prior to the Change inControl Purchase Date; and

 

A-6

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#### (4)          all shares of ApplicableStock that may be issued upon repurchase of Securities will be issued out ofthe Company’s authorized but unissued Common Stock or, in the event of amerger, consolidation, or other similar transaction involving the Company thatis otherwise permitted under the terms of this Indenture in which the Companyis not the surviving corporation, out of the authorized but unissued commonstock, common equity interests, ordinary shares or depositary shares of thesurviving corporation or its direct or indirect parent corporation and, willupon issue, be duly and validly issued and fully paid and non-assessable andfree of any preemptive or similar rights.

 

If conditions (1) through(4) above are not satisfied in accordance with the terms thereof, the Change inControl Purchase Price shall be paid by the Company only in cash.

 

7.                                       CONVERSION

 

Subject to the provisionsof the Indenture, a Holder may convert the principal amount of this Note (orany portion of this Note equal to $1,000 or any integral multiple of $1,000 inexcess thereof) into Common Stock at any time prior to the close of business onthe Final Maturity Date, at the Conversion Price then in effect, if:

###  

### (a)          as of the last day ofthe immediately preceding fiscal quarter, the Closing Price of the Common Stockfor the last Trading Day of such fiscal quarter is 110% or more of the thencurrent Conversion Price on the Notes;

###  

### (b)         during the periodbeginning January 1, 2008 through the Final Maturity Date, the Closing Price ofthe Common Stock on the immediately preceding Trading Day was 110% or more ofthe then current Conversion Price on the Notes;

###  

### (c)          the Company distributesto Holders of Common Stock certain rights entitling them to purchase CommonStock at less than the Closing Price of the Common Stock for the last TradingDay preceding the declaration for such distribution;

###  

### (d)         the Company distributesto Holders of Common Stock assets, debt, securities or certain rights topurchase the Company’s securities, which distribution has a per share value asdetermined by the Board of Directors exceeding 10% of the Closing Price of theCommon Stock for the last Trading Day preceding the declaration for suchdistribution; or

###  

### (e)          the Company becomes aparty to a consolidation, merger or sale of all or substantially all of theCompany’s assets or a change in control occurs pursuant to which the CommonStock would be converted into cash, stock or other property unless all of theconsideration, excluding cash payments for fractional shares and cash paymentsmade pursuant to dissenters’ appraisal rights, in a merger or consolidationotherwise constituting a Changes of Control consists of shares of common stock,depositary receipts or other certificates representing common equity intereststraded on a national securities exchange or quoted on the Nasdaq NationalMarket, or will be so traded immediately following such merger or consolidation,and as a result of such merger or consolidation the Securities becomeconvertible solely into such common stock, depositary shares or othersecurities representing common equity interests.

 

In the case of Sections7(c) and 7(d) above, the Company must notify Holders at least 20 days prior tothe ex-dividend date for such distribution. Once the Company has given such notice, Holders may surrender theirSecurities for conversion at any time until the earlier of the close ofbusiness on the Business Day prior to the ex-dividend date or our announcementthat such distribution will not take place.

 

A-7

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A holder may also convertthe principal amount of this Note (or any portion thereof equal to $1,000 orany integral multiple of $1,000 in excess thereof) into Common Stock, if:

 

(a)                                  atany time prior to March 1, 2006 after any five (5) consecutive Trading Dayperiod in which the average Trading Prices for the Notes for that five (5)Trading Day period was less than 103% of the average Conversion Value for theNotes during that period; and

 

(b)                                 atany time on or after March 1, 2006 and prior to maturity after any five (5)consecutive Trading Day period in which the average Trading Prices for theNotes for that five (5) Trading Day period was less than 97% of the averageConversion Value for the Notes during that period, however, a Holder may notconvert a Security on or after March 1, 2006 pursuant to this clause if, at thetime of the calculation, the Closing Price of shares of Common Stock is betweenthe then current Conversion Price on the Securities and 110% of the thencurrent Conversion Price of the Notes.

 

If a Note is subject topurchase upon a Change in Control, the conversion right will terminate at the closeof business on the Business Day immediately preceding the Change in ControlPurchase Date for such Note or such earlier date as the Holder presents suchNote for purchase (unless the Company shall default in making the Change inControl Purchase Price, as the case may be, when due, in which case theconversion right shall terminate at the close of business on the date suchdefault is cured and such Note is purchased).

 

The initial ConversionPrice is $23.79 per share, subject to adjustment under certain circumstances asprovided in the Indenture.  The numberof shares of Common Stock issuable upon conversion of a Note is determined bydividing the principal amount of the Note or portion thereof converted by the ConversionPrice in effect on the Conversion Date. No fractional shares will be issued upon conversion; in lieu thereof, anamount will be paid in cash based upon the Closing Price of the Common Stock onthe Trading Day immediately prior to the Conversion Date.

 

To convert a Note, aHolder must (a) complete and manually sign the conversion notice set forthbelow and deliver such notice to a Conversion Agent, (b) surrender theNote to a Conversion Agent, (c) furnish appropriate endorsements andtransfer documents if required by a Registrar or a Conversion Agent, and(d) pay any transfer or similar tax, if required.  Notes so surrendered for conversion (inwhole or in part) during the period from the close of business on any regularrecord date to the opening of business on the next succeeding interest paymentdate (excluding Notes or portions thereof subject to purchase upon a Change inControl on a Change in Control Purchase Date, as the case may be, during theperiod beginning at the close of business on a regular record date and endingat the opening of business on the first Business Day after the next succeedinginterest payment date, or if such interest payment date is not a Business Day,the second such Business Day) shall also be accompanied by payment in fundsacceptable to the Company of an amount equal to the interest payable on suchinterest payment date on the principal amount of such Note then beingconverted, and such interest shall be payable to such registered Holdernotwithstanding the conversion of such Note, subject to the provisions of thisIndenture relating to the payment of defaulted interest by the Company.  However, if a Holder submits Notes forconversion between the record date for the final interest payment and theopening of business on the Final Maturity Date, such Holder will not berequired to pay funds equal to the interest payable on the Final MaturityDate.  If the Company defaults in thepayment of interest payable on such interest payment date, the Company shallpromptly repay such funds to such Holder. A Holder may convert a portion of a Note equal to $1,000 or any integralmultiple thereof.

 

A Note in respect ofwhich a Holder had delivered a Change in Control Purchase Notice exercising theoption of such Holder to require the Company to purchase such Note may be convertedonly if the Change in Control Purchase Notice is withdrawn in accordance withthe terms of the Indenture.

 

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8.                                       SUBORDINATION

 

The indebtednessevidenced by the Notes is, to the extent and in the manner provided in theIndenture, subordinate and junior in right of payment to the prior payment infull of all Senior Indebtedness of the Company.  Any Holder by accepting this Note agrees to and shall be bound bysuch subordination provisions and authorizes the Trustee to give them effect.In addition to all other rights of Senior Indebtedness described in theIndenture, the Senior Indebtedness shall continue to be Senior Indebtedness andentitled to the benefits of the subordination provisions irrespective of anyamendment, modification or waiver of any terms of any instrument relating tothe Senior Indebtedness or any extension or renewal of the Senior Indebtedness.

 

9.                                       DENOMINATIONS,TRANSFER, EXCHANGE

 

The Notes are inregistered form, without coupons, in denominations of $1,000 and integralmultiples of $1,000.  A Holder mayregister the transfer of or exchange Notes in accordance with theIndenture.  The Registrar may require aHolder, among other things, to furnish appropriate endorsements and transferdocuments and to pay any taxes or other governmental charges that may beimposed in relation thereto by law or permitted by the Indenture.

 

10.                                 PERSONSDEEMED OWNERS

 

The Holder of a Note maybe treated as the owner of it for all purposes.

 

11.                                 UNCLAIMEDMONEY

 

If money for the paymentof principal or interest remains unclaimed for two years, the Trustee or PayingAgent will pay the money back to the Company at its written request, subject toapplicable unclaimed property law. After that, Holders entitled to money must look to the Company forpayment as general creditors unless an applicable abandoned property lawdesignates another person.

 

12.                                 AMENDMENT,SUPPLEMENT AND WAIVER

 

Subject to certainexceptions, the Indenture or the Notes may be amended or supplemented with theconsent of the Holders of at least a majority in aggregate principal amount ofthe Notes then outstanding, and an existing default or Event of Default and itsconsequence or compliance with any provision of the Indenture or the Notes maybe waived in a particular instance with the consent of the Holders of amajority in aggregate principal amount of the Notes then outstanding.  Without the consent of or notice to anyHolder, the Company and the Trustee may amend or supplement the Indenture orthe Notes to, among other things, cure any ambiguity, defect or inconsistencyor make any other change that does not adversely affect the rights of anyHolder.

 

13.                                 SUCCESSORENTITY

 

When a successorcorporation assumes all the obligations of its predecessor under the Notes andthe Indenture in accordance with the terms and conditions of the Indenture, thepredecessor corporation (except in certain circumstances specified in theIndenture) be released from those obligations.

 

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14.                                 DEFAULTSAND REMEDIES

 

Under the Indenture, anEvent of Default includes: (i) default for 30 days in payment of any interest or AdditionalInterest on any Notes; (ii) default in payment of any principal(including, without limitation, any premium, if any) on the Notes when due;(iii) failure by the Company for 60 days after notice to it to comply withany of its other agreements contained in the Indenture or the Notes; (iv)default in the payment of certain indebtedness of the Company or a SignificantSubsidiary; (v) failure by the Company to give the Holders notice of theirright to require the Company to purchase Notes upon a Change of Control and(vi) certain events of bankruptcy, insolvency or reorganization of the Companyor any Significant Subsidiary.  If anEvent of Default (other than as a result of certain events of bankruptcy,insolvency or reorganization of the Company) occurs and is continuing, theTrustee or the Holders of at least 25% in aggregate principal amount of theNotes then outstanding may declare all unpaid principal to the date ofacceleration on the Notes then outstanding to be due and payable immediately,all as and to the extent provided in the Indenture.  If an Event of Default occurs as a result of certain events ofbankruptcy, insolvency or reorganization of the Company, unpaid principal ofthe Notes then outstanding shall become due and payable immediately without anydeclaration or other act on the part of the Trustee or any Holder, all as andto the extent provided in the Indenture. Holders may not enforce the Indenture or the Notes except as provided inthe Indenture.  The Trustee may requireindemnity satisfactory to it before it enforces the Indenture or theNotes.  Subject to certain limitations,Holders of a majority in aggregate principal amount of the Notes thenoutstanding may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders noticeof any continuing default (except a default in payment of principal orinterest) if it determines that withholding notice is in their interests.  The Company is required to file periodicreports with the Trustee as to the absence of default.

 

15.                                 TRUSTEEDEALINGS WITH THE COMPANY

 

U.S. Bank NationalAssociation, the Trustee under the Indenture, in its individual or any othercapacity, may make loans to, accept deposits from and perform services for theCompany or an Affiliate of the Company, and may otherwise deal with the Companyor an Affiliate of the Company, as if it were not the Trustee.

 

16.                                 NORECOURSE AGAINST OTHERS

 

A director, officer,employee or shareholder, as such, of the Company shall not have any liabilityfor any obligations of the Company under the Notes or the Indenture nor for anyclaim based on, in respect of or by reason of such obligations or theircreation.  The Holder of this Note byaccepting this Note waives and releases all such liability.  The waiver and release are part of theconsideration for the issuance of this Note.

 

17.                                 AUTHENTICATION

 

This Note shall not bevalid until the Trustee or an authenticating agent manually signs thecertificate of authentication on the other side of this Note.

 

18.                                 ABBREVIATIONSAND DEFINITIONS

 

Customary abbreviationsmay be used in the name of the Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= jointtenants with right of survivorship and not as tenants in common), CUST (=Custodian) and UGMA (= Uniform Gifts to Minors Act).

 

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All terms defined in theIndenture and used in this Note but not specifically defined herein are definedin the Indenture and are used herein as so defined.

 

19.                                 INDENTURETO CONTROL; GOVERNING LAW

 

In the case of anyconflict between the provisions of this Note and the Indenture, the provisionsof the Indenture shall control.  ThisNote shall be governed by, and construed in accordance with, the laws of theState of New York.

 

The Company will furnishto any Holder, upon written request and without charge, a copy of theIndenture.  Requests may be madeto:  UTStarcom, Inc., 1275 Harbor BayParkway, Alameda, CA  94502, (510)864-8800, Attention:  InvestorRelations.

 

A-11

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**ASSIGNMENTFORM**

 

To assign this Note, fillin the form below:

 

I or we assign andtransfer this Note to

 

 

(Insert assignee’ssoc. sec. or tax I.D. no.)

 

 

 

 

(Print or typeassignee’s name, address and zip code)

 

and irrevocably appoint

 

 

 

agent to transfer thisNote on the books of the Company.  Theagent may substitute another to act for him or her.

 

 
|                       |   | Your Signature:                                                      |
|----------------------------|--------|----------------------------------------------------------------------|
|                       |   |                                                                 |
|                       |   |                                                                 |
| Date:                      |   |                                                                 |   |   |
|                       |   | (Sign exactly as  your name appears on the  other side of this Note) |
|                       |   |                                                                 |
| *Signature guaranteed  by: |   |                                                                 |
|                       |   |                                                                 |
| By:                        |   |                                                                 |   |   |
|                            |        |                                                                      |  |  |  |  |  |  |

 

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*                                         Thesignature must be guaranteed by an institution which is a member of one of thefollowing recognized signature guaranty programs:  (i) the Securities Transfer Agent Medallion Program (STAMP);(ii) the New York Stock Exchange Medallion Program (MSP); (iii) theStock Exchange Medallion Program (SEMP); or (iv) such other guaranty programacceptable to the Trustee.

 

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**CONVERSIONNOTICE**

 

To convert this Note intoCommon Stock of the Company, check the box: o

 

To convert only part ofthis Note, state the principal amount to be converted (must be $1,000 or aintegral multiple of $1,000): $                .

 

If you want the stockcertificate made out in another person’s name, fill in the form below:

 

 

(Insert assignee’ssoc. sec. or tax I.D. no.)

 

 

(Print or typeassignee’s name, address and zip code)

 

 
|                       |   | Your Signature:                                                      |
|----------------------------|--------|----------------------------------------------------------------------|
|                       |   |                                                                 |
| Date:                      |   |                                                                 |   |   |
|                       |   | (Sign exactly as  your name appears on the  other side of this Note) |
|                       |   |                                                                 |
| *Signature guaranteed  by: |   |                                                                 |
|                       |   |                                                                 |
| By:                        |   |                                                                 |   |   |
|                            |        |                                                                      |  |  |  |  |  |  |

 

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*                                         Thesignature must be guaranteed by an institution which is a member of one of thefollowing recognized signature guaranty programs:  (i) the Securities Transfer Agent Medallion Program (STAMP);(ii) the New York Stock Exchange Medallion Program (MSP); (iii) theStock Exchange Medallion Program (SEMP); or (iv) such other guarantyprogram acceptable to the Trustee.

 

A-13

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**OPTIONTO ELECT REPURCHASE**

**UPONA CHANGE OF CONTROL**

 

To:                              UTStarcom,Inc.

 

The undersignedregistered owner of this Security hereby irrevocably acknowledges receipt of anotice from UTStarcom, Inc. (the “Company”) as to the occurrence of a Change inControl with respect to the Company and requests and instructs the Company topurchase the entire principal amount of this Security, or the portion thereof(which is $1,000 or an integral multiple thereof) below designated, inaccordance with the terms of the Indenture referred to in this Security at theChange in Control Purchase Price, together with accrued interest to, butexcluding, such date, to the registered Holder hereof.

 
| Dated: |   |                                                                                                                                                                                                        |   |   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|   |   |                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                        |
|   |   | Signature(s)                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                        |
|   |   | Signature(s) must be  guaranteed by a qualified guarantor institution with membership in an  approved signature guarantee program pursuant to Rule 17Ad-15 under the  Securities Exchange Act of 1934. |
|   |   |                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                        |
|   |   | Signature Guaranty                                                                                                                                                                                          |

 

Principal amount to bepurchased

(in an integral multipleof $1,000, if less than all):

 

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NOTICE:  The signature to the foregoing Election mustcorrespond to the Name as written upon the face of this Security in everyparticular, without alteration or any change whatsoever.

 

A-14

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**SCHEDULEOF EXCHANGES OF NOTES(4)**

 

The following exchanges,repurchases or conversions of a part of this global Note have been made:

 
| **Principal Amount  of this Global Note  Following Such  Decrease Date  of Exchange (or Increase)** |   | **Authorized  Signatory of  Securities  Custodian** |       | **Amount of  Decrease  in  Principal Amount  of this Global Note** |       | **Amount of  Increase in**

**Principal  Amount  of this Global Note** |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|--------------------------------------------------------------------|------------|------------------------------------------------------------------------|
|                                                                                                |   |                                                | ** ** |                                                               | ** ** |                                                                   |
|                                                                                                |   |                                                |       |                                                               |       |                                                                   |

 

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(4)  This schedule should be included only if theSecurity is a global Security.

 

A-15

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**CERTIFICATETO BE DELIVERED UPON EXCHANGE OR REGISTRATIONOF TRANSFER OF TRANSFER RESTRICTED SECURITIES(5)**

 

Re:                               7/8%Convertible Subordinated Notes due 2008 (the “Notes”) of UTStarcom, Inc.

 

This certificate relatesto $        principal amount of Notes ownedin (check applicable box)

 

o   book-entryor    o   definitive form by                   (the “Transferor”).

 

The Transferor hasrequested a Registrar or the Trustee to exchange or register the transfer ofsuch Notes.

 

In connection with suchrequest and in respect of each such Note, the Transferor does hereby certifythat the Transferor is familiar with transfer restrictions relating to theNotes as provided in Section 2.12 of the Indenture dated as ofMarch 12, 2003 between UTStarcom, Inc. and U.S. Bank National Association,as trustee (the “Indenture”), and the transfer of such Note is being madepursuant to an effective registration statement under the Securities Act of1933, as amended (the “Securities Act”) (check applicable box) or the transferor exchange, as the case may be, of such Note does not require registrationunder the Securities Act because (check applicable box):

 

o                                    Such Note is beingtransferred pursuant to an effective registration statement under theSecurities Act.

 

o                                    Such Note is beingacquired for the Transferor’s own account, without transfer.

 

o                                    Such Note is beingtransferred to the Company or a Subsidiary (as defined in the Indenture) of theCompany.

 

o                                    Such Note is beingtransferred to a person the Transferor reasonably believes is a “qualifiedinstitutional buyer” (as defined in Rule 144A or any successor provisionthereto (“Rule 144A”) under the Securities Act) that is purchasing for itsown account or for the account of a “qualified institutional buyer”, in eachcase to whom notice has been given that the transfer is being made in relianceon such Rule 144A, and in each case in reliance on Rule 144A.

 

o                                    Such Note is beingtransferred pursuant to and in compliance with an exemption from theregistration requirements under the Securities Act in accordance with Rule 144(or any successor thereto) (“Rule 144”) under the Securities Act.

 

Such Note is beingtransferred pursuant to and in compliance with an exemption from theregistration requirements of the Securities Act (other than an exemptionreferred to above) and as a result of which such

 

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(5)  This certificate should only be included ifthe Security is a Restricted Security.

 

A-16

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Note will, upon such transfer, cease to be a “restricted security”within the meaning of Rule 144 under the Securities Act.

 

The Transferoracknowledges and agrees that, if the transferee will hold any such Notes in theform of beneficial interests in a global Note which is a “restricted security”within the meaning of Rule 144 under the Securities Act, then suchtransfer can only be made pursuant to Rule 144A under the Securities Actand such transferee must be a “qualified institutional buyer” (as defined inRule 144A).

 
| Date:  |   |   |                         |   |
|--------|--------|--------|------------------------------|--------|
|   |   |   | (Insert Name of  Transferor) |

 

A-17

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